MULTIMEDIA INC, 10-K, 1994-03-28

MULTIMEDIA INC
10-K, 1994-03-28
TELEVISION BROADCASTING STATIONS

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United States
Securities and Exchange Commission
WASHINGTON, D.C. 20549

FORM 10-K

[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)

[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

For the fiscal year ended December 31, 1993
For the transition period from to
Commission file number 0-6265
MULTIMEDIA, INC.
(Exact name of registrant as specified in its charter)

South Carolina 57-0173540
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

305 South Main Street, Greenville, South Carolina 29601
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code (803) 298-4373

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $.10 par value
(Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes__X__ No _____

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]

The aggregate market value of the voting stock held by nonaffiliates
(shareholders holding as of December 31, 1993, less than 5% of the
outstanding common stock, excluding directors and officers), computed by
reference to the average bid and asked prices of such stock, as of March
3, 1994, was $733,165,000.

The number of shares outstanding of the Registrant's common stock, $.10 par
value, was 37,274,978 at March 3, 1994.

DOCUMENTS INCORPORATED BY REFERENCE

Incorporated Documents Location in Form 10-K

Portions of 1993 Annual Report to Shareholders Parts I and II
Portions of Proxy Statement dated March 15, 1994 Part III

<PAGE>
PART I.

Item 1. Business.

Multimedia, Inc. (the "Company") is a diversified media company
with corporate headquarters in Greenville, South Carolina. The
Company is a South Carolina corporation which began using its
current name in 1968; however, its predecessor newspaper and
broadcasting companies date back as early as 1888. The Company
publishes 11 daily and approximately 50 non-daily newspaper
publications; owns and operates five television and five radio
stations; serves approximately 417,000 cable television subscribers
in five states; monitors approximately 52,000 security alarm
customers; and produces and syndicates television programming.

The Company's industry segments are newspaper publishing,
broadcasting, cable television, entertainment and security alarms.
Financial information for these segments is presented in Note 14 of
the Notes to Consolidated Financial Statements in the 1993 Annual
Report, which material is incorporated herein by reference.

Further information relating to the development of the business
since the beginning of the fiscal year covered by this report is
included in Management's Discussion and Analysis of Financial
Condition and Results of Operations set forth on pages 16 through
23 in the 1993 Annual Report and in the Notes to Consolidated
Financial Statements in the 1993 Annual Report, which material is
incorporated herein by reference.

RECAPITALIZATION MERGER

On September 20, 1985, the Company's shareholders approved a
Recapitalization Agreement and Plan of Merger providing for the
merger of MM Acquiring Corp., a new corporation which had been
organized for purposes of the merger, with and into the Company
(the "Recapitalization Merger"). The purpose of the
Recapitalization Merger was to recapitalize the Company and thereby
provide the Company's shareholders with an opportunity to receive
a premium over historical prices for a significant portion of their
shares while retaining an ongoing equity interest in the Company
and to provide performance incentives to members of senior
management of the Company by providing them with increased equity
participation in the Company. The Recapitalization Merger was
consummated on October 1, 1985. Further information relating to
the Recapitalization Merger is included in Note 2 of the Notes to
Consolidated Financial Statements in the 1993 Annual Report, which
material is incorporated herein by reference.

NEWSPAPER OPERATIONS

The Company publishes the only daily newspapers in Greenville,
South Carolina; Asheville, North Carolina; Montgomery, Alabama;
Clarksville, Tennessee; Gallipolis and Pomeroy, Ohio; Point
Pleasant, West Virginia; Staunton, Virginia; Moultrie, Georgia; and
Mountain Home, Arkansas. It also publishes Sunday newspapers in
each market except Moultrie, Point Pleasant and Mountain Home. The
Company also publishes approximately 50 non-daily publications in
Alabama, Arkansas, Georgia, North Carolina, Ohio, South Carolina,
Virginia and Tennessee, including the monthly MUSIC CITY NEWS and
THE GOSPEL VOICE.
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In April 1993, the Company's Montgomery newspaper merged its
morning and afternoon newspapers. Prior year linage comparisons
have not been restated. However, if restated, billed advertising
linage would have increased 2.2% from 1992 to 1993. The increase
is primarily due to a strong rebound in classified advertising.

Substantially all of the Company's newspaper revenues are obtained
from advertising and circulation. Advertising rates and rate
structures vary depending upon circulation and type of advertising
(local, classified, national, etc.). The following table indicates
billed newspaper advertising linage and advertising revenues for
1993, 1992 and 1991.

1993 1992 1991

Advertising linage 144,928,000 146,172,000 155,199,000
Advertising revenues $99,173,000 $98,254,000 $98,127,000

The Company's newspapers are primarily home-delivered and are
generally sold by independent carriers and circulation dealers.
Certain non-daily publications are distributed free of charge,
using both mail and carrier delivery. The following table
indicates total paid newspaper circulation at year-end and
circulation revenues for 1993, 1992 and 1991.

1993 1992 1991
Circulation:
Daily 323,000 325,000 318,000
Sunday 352,000 351,000 344,000
Non-daily 202,000 159,000 159,000

Circulation revenues $30,233,000 $28,491,000 $26,024,000

The percentages of the Company's newspaper revenues contributed by
advertising, circulation and other operating revenues for the five
years ended December 31, 1993, were:

1993 1992 1991 1990 1989

Advertising revenues 73% 74% 76% 78% 79%
Circulation revenues 22 22 20 19 19
Other operating revenues 5 4 4 3 2
100% 100% 100% 100% 100%

Newsprint represents approximately 20% of the newspaper division's
operating expenses. The basis weight of newsprint used by the
Company is 30 pound paper. The price of newsprint remains
volatile, and it is difficult to predict any significant price
increase or decrease. The average cost per ton may vary depending
upon the competitive discount allowance throughout the year. Two
newsprint suppliers provide the majority of the Company's
newsprint. The Company believes that its newsprint supply sources
under existing arrangements are adequate.

The Company's newspapers compete for advertising principally on the
basis of readership and compete for circulation principally on the
basis of content. The Company's daily newspapers do not compete
directly with any other general circulation daily newspaper
published in that
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community. Most of the Company's newspapers
compete with other newspapers published in nearby cities and towns,
or with free distribution advertising weeklies. Further, all of
the Company's newspapers compete with newspapers having national or
regional circulation, as well as with magazines, radio, television,
outdoor and other advertising media.

BROADCASTING OPERATIONS

The Company wholly owns and operates four VHF television stations
located in St. Louis, Missouri (KSDK, an NBC affiliate);
Cincinnati, Ohio (WLWT, an NBC affiliate); Knoxville, Tennessee
(WBIR-TV, an NBC affiliate); and Macon, Georgia (WMAZ-TV, a CBS
affiliate). In addition, the Company owns a 51% majority interest
in WKYC-TV (an NBC affiliate) Cleveland, Ohio, and has operating
control of the station.

Television stations operate under network affiliation contracts
running from two to five years. The network provides programs to
its affiliated stations and sells commercial time in the programs
to national advertisers. The stations also sell commercial time in
the programs to national and local advertisers. Generally, a
network affiliation agreement can be cancelled prior to the
expiration of the contract by either party with 180 days notice.
The Company has experienced no difficulties in the past with such
affiliation renewals. The Company's television stations'
affiliation renewal dates follow:

Television Station Network Affiliation Renewal

KSDK May 1, 1994
WLWT September 1, 1994
WBIR September 10, 1994
WKYC December 26, 1994
WMAZ February 1, 1995

Each television station transmits live, filmed or taped programs
purchased from others or produced by the station. For both
television and radio, the Company endeavors to present a balanced
schedule of programs, including entertainment, news, public
affairs, sports and other programs of public service and public
interest.

The Company owns and operates AM and FM radio broadcasting stations
in Greenville, South Carolina, and Macon, Georgia, and an AM
station in Spartanburg, South Carolina. Each of these stations is
authorized to operate 24 hours per day, and each maintains a daily
operating schedule of at least 18 hours.

The principal sources of the Company's television and radio
revenues consist of payments from national, regional and local
advertisers or agencies for program time or advertising
announcements, payments from the networks for broadcasting network
programming and payments by advertisers and other broadcasters for
services such as the production of films or the taping of
advertising material.
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The percentages of the Company's broadcasting revenues contributed
by television and radio and other for the five years ended December
31, 1993, were:

1993 1992 1991 1990 1989

Television revenues 94% 91% 91% 89% 89%
Radio and other revenues 6 9 9 11 11
100% 100% 100% 100% 100%

In January 1993, the Company sold its mobile video production
business for $4.5 million, which resulted in a gain of
approximately $2.3 million before taxes. Revenues from the mobile
video production business are included in the above table under
other revenues.

During the first quarter of 1994, the Company sold its radio
stations in Milwaukee, Wisconsin, and Shreveport, Louisiana, for a
total of $7.2 million, which resulted in a gain of approximately
$3.6 million before taxes.

Excluding the results of the properties sold during 1993 and the
first quarter of 1994, broadcasting revenues would have decreased
approximately 1% and operating profit would have increased
approximately 5% from 1992 to 1993.

The market size, rank and share for the Company's television
stations are presented below:
Rank Share
WKYC (Market #12)
1993 2 17
1992 3 17
1991 3 17

KSDK (Market #18)
1993 1 26
1992 1 24
1991 1 24

WLWT (Market #31)
1993 2 19
1992 3 17
1991 2 21

WBIR (Market #62)
1993 1 28
1992 1 27
1991 1 27

WMAZ (Market #120)
1993 1 42
1992 1 43
1991 1 44

Note: Information represents station ADI TV Household
share sign-on/sign-off for the November Arbitron
or Nielsen of the respective period.

Source for market size: "Arbitron Television - 1993"
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The Company's television and radio stations compete for revenues
principally on the basis of ratings. The Company's television and
radio stations compete for revenues with other advertising media
such as newspapers, magazines and other television and radio
stations. Other sources of present and potential competition
include cable television ("CATV"), pay cable and subscription TV
operations. CATV systems currently operate in most of the market
areas served by the Company's communications media. In addition,
franchises for CATV systems have been granted by various
communities in these market areas, and additional CATV franchises
may be considered and granted from time to time. The future of
broadcasting depends on a number of factors, including the general
strength of the economy, population growth, overall advertising
revenues, relative efficiency compared to other competing
advertising media and existing and future governmental regulations
and policies.

The business strategy of the Company's broadcasting division
focuses on providing quality local programming and service to each
of its respective communities. The most important local
programming segment to the Company's broadcasting division is local
news programming. Local news programming typically has the highest
rating of any local programming segment, and television stations
usually receive a significant portion of their advertising revenues
from the local news segments. Quality local news coverage is also
important in establishing a local station's public service
reputation.

Further information regarding the Company's broadcasting operations
is presented under "Federal Regulation of Broadcasting".

CABLE OPERATIONS

The Company operates cable television systems serving subscribers
in Kansas, Oklahoma, Illinois, Indiana and North Carolina. The
following table shows homes passed, basic and pay subscribers,
basic penetration, pay-to-basic ratio and average monthly revenue
per cable subscriber at the end of 1993, 1992 and 1991.

1993 1992 1991

Homes passed 694,000 688,000 623,000
Basic subscribers 417,000 410,000 365,000
Pay subscribers 323,000 333,000 312,000
Basic penetration 60.1% 59.6% 58.6%
Pay-to-basic ratio 77.5% 81.2% 85.5%
Average monthly revenue
per cable subscriber $33.29 $32.13 $30.36

The majority of the increase in basic subscribers from 1991 to 1992
was due to the purchase of 33,000 cable television subscribers in
Indiana and Illinois.

Cable television is the distribution of television signals and
special information programs to subscribers within the community by
means of a coaxial cable system. A cable system may also offer pay
television services which provide, for an extra charge, special
programs such as recently released movies, entertainment programs
or selected sports events. Subscribers receive these
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programs on a designated channel of the cable system which is
restricted with electronic security devices to isolate the pay
television signal so that only subscribers to the service can
receive it.

The Company holds approximately 140 franchises from local governing
authorities which permit the Company to operate a CATV system in
the granting community (see Federal Regulation of Cable
Television). These franchises, which expire at varying dates
ranging from one to 20 years, are generally non-exclusive and may
be terminated for failure to comply with specified conditions. In
most cases, the Company is required to pay fees generally ranging
from three to five percent of the system's revenues to the
particular local governing authority granting the franchise. At
the end of 1993, approximately 52 systems, which account for more
than 68% of the Company's subscribers, have franchise agreements
expiring in the year 2000 and beyond.

During 1993, the Company began a five-year $150 million investment
in the technological upgrade of its cable television operations.
The investment includes approximately $45 million in each of the
next two years to replace the coaxial wire in our cable systems
with fiber. The majority of the remaining portion of the $150
million program will include the integration of digital compression
and the installation of interactive converter boxes in the homes of
approximately 50% of our customers, being the percent of the
existing customers that we expect will want the new interactive
services. The Company believes the technological upgrade will
prepare it for new competitors and potential revenue opportunities.

The Company may compete with other companies and individuals in the
submission of applications for additional franchises, the renewal
of existing franchises and in seeking to acquire operating CATV
systems and under-developed franchises. Since most franchises are
granted on a non-exclusive basis, other applicants may obtain
franchises in areas where the Company presently operates systems or
holds franchises. The Company's cable television division competes
for revenues principally on the basis of quality of service, a
variety of programming options and pricing.

The Company's strategy is to develop clusters of cable television
systems in suburban communities of major metropolitan markets and
other areas with favorable demographics. Management believes that
the clustering of cable systems produces operating, marketing and
servicing efficiencies.

On February 22, 1994, the Federal Communications Commission
("FCC" or "Commission") announced several decisions relating to
cable rates (see Federal Regulation of Cable Television).

Wireless Cable Service

The Company operates wireless cable systems in the Oklahoma City,
Oklahoma, and Wichita, Kansas, metropolitan areas. Wireless cable
is over-the-air distribution to consumers' residences of video
programming by means of microwave radio channels. It combines
standard broadcast television reception equipment with microwave
reception equipment and uses a combination downconverter and
channel selector to provide a composite of broadcast and non-
broadcast signals to subscribers. In this regard, wireless cable
may provide an alternative programming delivery service to that
offered by a traditional cable television system. The frequencies
allocated by the FCC for this use are those in the multichannel
multipoint distribution service ("MMDS"), Private Operational Fixed
Microwave Service ("OFS") and, on a part-time basis, the
Instructional
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Television Fixed Service ("ITFS").

The Company holds several licenses issued by the FCC for use of
frequencies in its Oklahoma City systems. For both the Oklahoma
City and Wichita systems, the Company has entered into lease
agreements with the FCC license-holders for various MMDS and ITFS
frequencies. Terms of these agreements vary from one year to five
years with provision for renewal.

In 1990 and 1991, the Commission simplified its regulations and
procedures applicable to the wireless cable business in order to
allow wireless cable systems to compete more effectively with
traditional cable systems. Among other things, the Commission
eliminated its rules restricting the number of wireless cable
channels a single entity can control in a market and modified
interference requirements and processing practices to accelerate
the application process. The Commission also limited the future
ownership or lease of wireless cable channels by cable television
operators within their local franchise areas, while grandfathering
existing wireless cable operations owned by cable television
operators. Further, the Commission modified restrictions on lease
terms for MMDS use of ITFS frequencies and increased power
limitations and channel assignment standards. The Cable Television
Consumer Protection and Competition Act of 1992 (the "1992 Act")
prohibits common ownership of cable television and wireless cable
operations in a franchise area. However, existing operations, such
as those of the Company, are grandfathered, and the FCC is
authorized to grant waivers of the cross-ownership restriction in
other situations.

Wireless cable operators that include local or distant television
stations in their service offerings traditionally have relied upon
the compulsory broadcast retransmission license established by the
Copyright Act to cover their use of copyrighted material contained
in such signals. The Copyright Office has ruled that the
compulsory license does not cover wireless cable operations. The
wireless cable industry is expected to seek legislation to clarify
that wireless cable operators are eligible for the license. The
provisions of the 1992 Act governing mandatory carriage of
television broadcast signals (see Federal Regulation of
Broadcasting) do not apply to wireless cable operations. However,
those provisions dealing with retransmission consent are
applicable. Consequently, wireless cable operators are required to
obtain the consent of local broadcast stations prior to utilizing
microwave frequencies to distribute such stations. The Company
does not use microwave frequencies to distribute local over-the-air
television stations in its Oklahoma City operations, but it does in
Wichita, and it has obtained the requisite consents for
distribution of those local stations.

SECURITY ALARM OPERATIONS

The Company sells or leases and installs residential and commercial
alarm equipment and provides monitoring services for the alarm
owner or lessee. These accounts are monitored through a central
computer located in Wichita, Kansas. At year-end, the Company
provided security monitoring services for approximately 52,000
customers (both residential and commercial) primarily located in
the midwest and western United States. These accounts were
obtained through acquisitions and through in-house sales efforts.
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The following table shows the number of subscribers and the average
recurring monthly revenue per security subscriber at the end of
1993, 1992 and 1991.

1993 1992 1991

Number of subscribers 52,000 35,000 26,000
Average recurring monthly
revenue per subscriber $25.13 $23.09 $21.94

The Company's security alarm division generates revenues from the
installation, monitoring and servicing of security alarm systems.
Monitoring fees, which represent approximately 80% of the
division's revenues, consist of payments from customers for the
surveillance of the security devices in their home or business.
These devices transmit a signal through telephone lines or radio
waves to the monitoring station whenever the customer's alarm is
triggered. Generally, monitoring contracts between the Company and
alarm customers are for at least three years.

There are many security companies competing in the same markets
with the Company. The Company may also compete with other
companies in the acquisition of existing security accounts.
The Company's security division competes for revenues with many
other security companies on the basis of quality of service,
ability to monitor and service security systems and price.

ENTERTAINMENT OPERATIONS

The Company's entertainment division produces television
programming for broadcast both in the U.S. and internationally.
The division derives virtually all of its operating profits and
approximately 50% and 25%, respectively, of its revenues from the
production and syndication of two daytime television talk shows,
the "DONAHUE" and "SALLY JESSY RAPHAEL" shows. Both of these shows
are primarily distributed via satellite to the stations for
showing. A significant portion of operating profit for the
division is contributed by the "DONAHUE" show. The Company's
syndication activities continue to be an important source of
revenues, particularly the "DONAHUE" show. The Company contracts
with television stations for exclusive rights to air these programs
in their respective markets. The length of these contracts
generally range from one to three years. Fees from these sales to
stations and the sale of advertising in these shows are the
principal sources of revenue for the Company's entertainment
division. In addition, the Company produces other talk shows, and
special dramas, movies and docudramas for first-run syndication,
the networks, cable, PBS and the international marketplace.

The "DONAHUE" show, hosted by Phil Donahue, is in its twenty-sixth
year of production and syndication. The show is currently seen in
189 U.S. markets and in 50 foreign countries. Phil Donahue is
currently under contract with the Company through August 31, 1995.

The "SALLY JESSY RAPHAEL" show is currently in its eleventh season
of production and syndication and is broadcast in 186 U.S. markets
and in 30 foreign countries. The show's revenues have grown
significantly over the last five years, due to increased ratings
and clearances. Sally Jessy Raphael is currently under contract
with the Company through September 1998.
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In September 1991, the Company purchased certain television and
first-run syndicated television assets from Carolco Pictures,
Inc.'s wholly owned subsidiary, Orbis Communications, now named
Multimedia Motion Pictures, Inc. ("MMP"). MMP's primary objective
is to produce made-for-television movies or miniseries for the
networks, syndication and cable marketplace. The number of hours
of programming produced and sold to various networks increased from
six hours in 1992 to 16 hours in 1993. The Company expects to
curtail this activity in the future to concentrate its resources on
more profitable programming opportunities.

The Company introduced a talk show, "JERRY SPRINGER", in September
1991 on four stations and began nationwide syndication in September
1992. The "Jerry Springer" show is currently seen in 145 U.S.
markets. Jerry Springer is currently under contract with the
Company through September 1997.

"RUSH LIMBAUGH, THE TELEVISION SHOW", a late-night talk show,
premiered in September 1992 and is currently seen in 223 U.S.
markets. "RUSH LIMBAUGH, THE TELEVISION SHOW" is a joint venture
between Ailes Communications, Rush Limbaugh and the Company. Rush
Limbaugh is currently under contract with the Company through
August 1995.

The Company plans to launch a news-oriented all talk channel for
cable in the fall of 1994.

The Company's entertainment division competes for revenues with
numerous other syndicated programming principally on the basis of
ratings.

EMPLOYEE RELATIONS

The Company employs approximately 3,500 full-time employees and has
contracts with local collective bargaining agents representing
approximately 5% of its employees. Employees of the Company
receive various supplemental benefits including group life and
health insurance, pension and salary deferral thrift plans. The
Company considers its relationship with employees excellent.

REGULATION OF BROADCASTING AND CABLE OPERATIONS

Federal Regulation of Broadcasting

The Company's television and radio broadcasting operations are
subject to the jurisdiction of the FCC under the Communications Act
of 1934 as amended (the "Act"). The Act empowers the FCC, among
other things, to issue, revoke or modify broadcasting licenses, to
assign frequency bands, to determine the location of stations, to
regulate the apparatus used by stations, to establish areas to be
served, to adopt such regulations as may be necessary to carry out
the provisions of the Act and to impose certain penalties for
violation of its regulations.

Under the Act, radio and television broadcast licenses may be
granted for maximum periods of seven and five years, respectively.
Upon application, and in the absence of conflicting applications or
adverse findings as to the licensee's qualifications, existing
radio and television licenses will be renewed without hearing by
the FCC for additional seven and five year terms,
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respectively.

If a competing application is filed against a licensee's renewal
application, the Act requires a full comparative hearing. The U.S.
Court of Appeals for the District of Columbia Circuit affirmed a
significant FCC decision in a comparative television renewal
proceeding which recognized an incumbent licensee's "renewal
expectancy" based on substantial service to its community. The
Court's decision indicated that a renewal expectancy, if proven by
sound past performance, should be considered by the FCC along with
other standard comparative factors applicable to both the incumbent
and the competing applicants such as (i) the applicants' other
media holdings (in this context, FCC policy disfavors owners of
multiple properties); (ii) the applicants' plans for management of
the facility by their respective owners (which is normally not
required in the case of a publicly owned broadcasting company); and
(iii) other factors, including local residency, civic involvement
and provision of signals to under-served populations. The FCC has
established procedures placing strict limitation on settlement
payments made to competing applicants in return for dismissal of
their applications. These rules were intended to reduce the
potential for abuse of the FCC's renewal procedures. The FCC
currently has pending a rulemaking and inquiry proceeding to
develop specific standards for determining whether an incumbent is
entitled to a renewal expectancy and for comparing incumbent
licensees with competing applicants as well as to establish
procedures regarding the order of proof for determining entitlement
to renewal expectancy.

Petitions to deny broadcast station license renewal applications
(as well as other types of broadcast applications) have been filed
in recent years by various parties asserting programming,
employment and other complaints. Most such petitions have been
denied by the FCC on the basis of pleadings and without formal
hearings. The Company's applications for the renewal of its
broadcast licenses for the regular term have heretofore been
granted without hearing; however, there is no assurance that this
experience will be repeated in the future.

The Company's television stations' FCC license renewal dates
follow:

Television Station FCC License Renewal

WMAZ April 1, 1997
WBIR August 1, 1997
WKYC October 1, 1997
WLWT October 1, 1997
KSDK February 1, 1998

The Act also prohibits the assignment of a license or the transfer
of control of a license or significant modification of broadcast
transmission facilities without prior approval of the FCC.
Moreover, FCC multiple ownership regulations prohibit the common
ownership or control of most communications media (i.e., television
and radio, television and daily newspapers, radio and daily
newspapers or television and cable television operations ("Cable"))
serving common or overlapping market areas. The Company owns daily
newspapers and AM and FM radio stations in Greenville, South
Carolina; and AM and FM radio stations and a television station in
Macon, Georgia. These ownership interests pre-dated the FCC's
multiple ownership rules and thus are "grandfathered", and
divestiture by the Company is not required. In the case of a sale
or transfer of control (other than a "pro forma" or non-substantial
transfer of control), however, the buyer
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or transferee would not be
able to continue the common ownership of the relevant properties
absent a waiver of the FCC's rules.

In addition, FCC multiple ownership regulations generally limit the
number of cognizable broadcast interests which may be owned by an
entity or individual. Cognizable interests under FCC multiple
ownership rules include 5% or greater voting stockholder interests
(10% or more for investment companies, bank trust departments and
insurance companies), general (and some types of limited)
partnership interests and official positions as officers or
directors. FCC multiple ownership regulations generally permit the
common ownership of up to 12 television stations (without regard to
whether they are in the UHF or VHF band), provided the total
audience reach of commonly owned television stations is less than
25% of the nation's television households. (For purposes of
calculating the total percentage of national television households,
only 50% of each UHF station's audience reach is counted.) A
rulemaking proceeding currently pending before the FCC proposes to
liberalize both the local and national limits on television
ownership. It is unlikely that this rulemaking will be concluded
before the end of 1994, and there can be no assurance that any of
these rules will be changed. In any event, the Company's broadcast
operations will continue to be subject to the FCC's ownership rules
and any changes the agency may adopt. The Company does not believe
that the FCC multiple ownership regulations for television stations
will restrict its growth except in areas with overlapping coverage
to its existing properties. In 1992 the FCC relaxed its "duopoly"
rule governing ownership by a single entity of multiple radio
stations in the same market. In local markets with 15 or more
stations, one entity is permitted to own two AM and two FM
stations, so long as the combined audience share of these stations
does not exceed 25% of the market at the time of acquisition. In
markets with fewer than 15 stations, ownership of up to three radio
stations is permitted, no more than two of which may be in the same
service (AM or FM), provided that the total number of stations
owned comprises less than 50% of the total number of stations in
the market. The FCC also increased the number of stations which
may be owned by a single entity on a national basis to 18 AM and 18
FM stations; in 1994 this will increase to 20 AM and 20 FM
stations.

The 1992 Act contains two provisions that fundamentally alter the
relationship that has existed in recent years between cable
television systems and television broadcast stations whose signals
are distributed to cable subscribers. The first deals with the
rights of "local" commercial and non-commercial television
broadcasters to mandatory carriage of their signals on cable
systems ("must-carry"). The second, in certain defined
circumstances, prohibits cable operators from carrying the signals
of television stations without first obtaining their consent
("retransmission consent"). The two provisions are related in
that, with respect to local cable carriage, broadcasters must make
a choice once every three years on a system by system basis whether
to proceed under the must-carry rules or whether to insist upon
retransmission consent in order for their signal to be carried.
The FCC's implementing regulations required broadcasters to elect
between must-carry and retransmission consent by June 17, 1993,
with the choice binding for three years. A broadcast station has
the right to choose must-carry, assuming it can deliver a signal of
specified strength, with regard to cable systems in its Area of
Dominant Influence as defined by the audience measurement service
Arbitron. Stations electing to grant retransmission authority were
expected to conclude their consent agreements with cable systems by
October 6, 1993, the date on which system's authority to carry
broadcast signals without consent expired. In June 1993, the
Company elected retransmission consent on the majority of cable
systems that carry the signals of the stations in the stations'
markets. Must-carry was elected on a small percentage of systems.
Pending negotiation of long-term retransmission agreements, the
stations
11
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have entered into interim agreements (currently scheduled
to expire June 30, 1994) with all of the affected cable system
operators.

The must-carry provisions of the 1992 Act have been challenged as
unconstitutional. A special three-judge district court rejected
the challenge. That decision has been appealed, and the Supreme
Court of the United States heard oral arguments in the case on
January 12, 1994. Its decision is expected later this year. The
Company cannot predict the outcome of the case. A separate
challenge to the retransmission consent provision of the 1992 Act
was rejected by a Federal district court. An appeal of that
decision is pending.

The FCC's syndicated exclusivity and network non-duplication rules
enable television broadcast stations, that have obtained exclusive
distribution rights for programming in their market, to require
cable systems (with more than 1,000 subscribers) to delete or
"black-out" such programming from other television stations which
are carried by the cable system. The FCC is studying whether to
relax or abolish the geographic limitations on program exclusivity
contained in its rules so as to allow parties to set by contract
the geographic scope of exclusive distribution rights.

In addition to full service television broadcast stations, the FCC,
under its rules, provides for authorization of low power television
stations ("LPTV"), subscription television stations ("STV"),
multipoint distribution services ("MDS"), multichannel multipoint
distribution services ("MMDS") and direct satellite-to-home
broadcast services ("DBS"). These services have the technical
capability to distribute television programming to viewers' homes
and, thus, to compete with conventional full service television
stations. Technological developments in broadcasting and related
fields, such as High Definition Television ("HDTV"), Digital Audio
Broadcasting ("DAB") as well as changes in FCC regulations, may
affect the competitiveness of new and existing alternatives to
conventional radio and television services or otherwise affect the
market for radio and television broadcast services. For example,
the FCC favors relaxation of the cross-ownership ban on telephone
companies providing cable television services in their telephone
service area and has authorized telephone companies to provide
cable service on a "video dial tone" basis. (See Federal
Regulation of Cable Television.) In this regard, the United States
District Court for the Eastern District of Virginia recently held
that the provision of the Communications Act that prohibits
telephone companies from providing video programming to subscribers
within their service area is unconstitutional. Although the
court's ruling only applied to the operations of Bell Atlantic (the
regional Bell Operating Company ["RBOC"] that brought the suit) and
its subscribers, other RBOCs have brought suit in other courts
seeking to have the provision declared unconstitutional.
Congressional legislation to eliminate or modify this cross-
ownership ban has also been proposed. The FCC also has proposed
the establishment of a local multipoint distribution service
("LMDS") that could offer multiple channels of video programming
using very high-frequency microwave signals in the 28 GHz band.
Under the proposal, two service providers in each of 489 markets
across the country would be licensed to distribute video, data and
other telecommunications services. In January 1994, the FCC
announced that it would issue a Second Notice of Proposed
Rulemaking in this proceeding designed to determine whether it
should implement a Negotiated Rulemaking Proceeding to allow
participants to determine whether the 28 GHz band could be shared
by terrestrial LMDS and satellite users. The Company cannot
predict the outcome of the FCC's proceeding, nor can the Company
assess the effect which future technological developments or
changes in FCC regulations or policies may have on the Company's
operations.
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There are additional FCC regulations and policies, and regulations
and policies of other federal agencies, regulating network-
affiliate relations, political broadcasts, advertising practices,
program content, equal employment opportunities, application
procedures and other areas affecting the business or operation of
broadcast stations. Proposals for additional or revised
regulations or legislation are pending and considered by federal
regulatory agencies and Congress from time to time. The Company
cannot predict the effect of existing and proposed federal
regulations, legislation and policies on its broadcasting business.

The foregoing does not purport to be a complete summary of all the
provisions of the Act or the regulations and policies of the FCC
thereunder.

Federal Regulation of Cable Television

The cable television industry is subject to extensive government
regulation at the federal and local levels and, in some cases, at
the state level. The relationship of various levels of government
in regulating cable television and the extent of such regulation is
established by the Cable Communications Policy Act of 1984 (the
"1984 Act") and the recent amendment thereto, the 1992 Act. The
FCC has had and will continue to have principal federal
responsibility for regulating cable television. The 1992 Act has
greatly expanded the regulatory framework of the FCC within which
cable operators must operate. Under this new framework, the FCC
was required to adopt new regulations implementing Congressional
policies for such aspects of cable operations as rates, customer
service obligations, carriage of television broadcast signals and
other types of programming, technical matters, leased access,
franchise issues, consumer electronics equipment standards,
ownership and employment practices. During the past year, the FCC
completed initial rulemaking proceedings in accordance with
timetables imposed by the 1992 Act; however, many of the new rules
remain under reconsideration by the FCC. In addition, provisions
of the 1992 Act and some of the FCC's implementing regulations have
been challenged in court. Thus, there remains an element of
uncertainty as to the ultimate nature and scope of the new
requirements.

A. Television Signal Carriage and Programming. The 1992 Act
contains two elements that fundamentally alter the relationship
between cable systems and television broadcast stations. The first
reinstates the mandatory carriage of certain local over-the-air
television stations ("must-carry" rules). Such rules have
previously been held unconstitutional as violative of cable
operators' First Amendment Rights. The second element provides
that in certain circumstances television stations may prohibit the
carriage by cable systems absent consent ("retransmission
consent"). The two provisions are related in that broadcast
stations must elect either must-carry or retransmission consent on
local cable systems. Election must be made every three years. For
the current three-year election period, the Company's cable systems
have succeeded in maintaining desirable channel line-ups by
accommodating those stations electing mandatory carriage and
entering into retransmission consent agreements with others. The
U.S. Supreme Court recently heard arguments on an appeal of the
1992 Act's must-carry provisions and is expected to rule on their
constitutionality later this year. In addition, the FCC is
reconsidering certain aspects of its recently-adopted regulations
governing must-carry and retransmission consent. (See also,
Federal Regulation of Broadcasting, above.)

The FCC's syndicated exclusivity and network non-duplication rules
enable television broadcast
13
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stations, that have obtained exclusive
distribution rights for programming in their market, to require
cable systems (with more than 1,000 subscribers) to delete or
"black-out" such programming from other television stations which
are carried by the cable system. The extent of such deletions
varies from market to market but generally makes distant broadcast
signals less attractive sources of programming. The FCC also is
studying whether to relax or abolish the geographic limitations on
program exclusivity contained in its rules so as to allow parties
to set by contract the geographic scope of exclusive distribution
rights. This could result in even more extensive program black-
outs.

The FCC has recommended to Congress that it repeal at least part of
the cable industry's compulsory copyright license which Congress
established in 1976 to serve as a means of compensating program
suppliers for cable retransmission of broadcast signals. (See
Copyright discussion, below.) The FCC determined that the
statutory compulsory copyright license for distant broadcast
signals no longer served the public interest and that private
negotiations between the applicable parties would better serve the
public. The FCC has deferred a decision on whether to recommend
the repeal of the statutory compulsory copyright license for
retransmission of local broadcast signals. Legislation has been
proposed to repeal the compulsory copyright license law. Without
the compulsory license, cable operators might need to negotiate
rights from the copyright owners for each program carried on each
broadcast station in the channel lineup. Such negotiated
agreements could increase the cost to cable operators of carrying
broadcast signals. The exact relationship between the compulsory
license and the 1992 Act's retransmission consent provision is
unclear, and it is expected that additional legislation will be
introduced to address this issue.

The FCC requires that non-broadcast cable origination programming
comply with FCC standards similar to those imposed on broadcasters.
These standards include regulations governing political advertising
and programming, advertising during children's programming,
prohibition of lottery information and sponsorship identification
requirements.

The 1992 Act imposes certain restrictions on cable operators which
have an attributable ownership interest in satellite programming
services. Vertically-integrated companies are prohibited from
unreasonably refusing to deal with a multichannel distributor and
from discriminating in price, terms and conditions in the sale of
programming to multichannel distributors if the effect is to hinder
or prevent competition. As required by the 1992 Act, the FCC
issued rules governing distribution practices and contractual
relationships between vertically-integrated programmers and cable
systems in an effort to promote competition and diversity in the
programming market and to increase its availability to consumers.
However, the rules allow programmers to: establish credit,
financial or technical qualifications; establish different prices,
terms and conditions based on actual and reasonable differences;
and enter into exclusive arrangements if in the public interest.
This provision has withstood judicial challenge, but an appeal of
the court's decision is pending. In addition, the FCC is
reconsidering the rules it adopted to implement statutory policy.

B. Cable Television Ownership. As a result of the 1984 Act,
the FCC is, with a few exceptions, the only governmental agency
authorized to prescribe rules relating to cable system ownership or
control by persons with interest in other mass media
communications. The 1984 Act prohibits common ownership or control
of a television station and a cable system in the station's Grade
B signal coverage area (typically an area approximately 15-75 miles
from the
14
<PAGE>
station's transmitting antenna). The 1992 Act imposes
restrictions on common ownership or control of MMDS and Satellite
Master Antenna Television ("SMATV") operations in a cable service
area. (SMATV is a video delivery system that receives programming
through a satellite earth station for distribution to viewers
(without using public rights of way) in multiple dwelling complexes
such as apartment buildings and hotels.) Existing ownership
interests of MMDS or SMATV services are unaffected. The 1992 Act
directed the FCC to implement horizontal and vertical ownership
limitations on cable operators. With regard to horizontal
ownership, the FCC adopted rules limiting the number of subscribers
a cable operator is authorized to reach to no more than 30 percent
of all homes passed by cable nationwide. The horizontal ownership
limits were invalidated by a federal court, and the FCC has stayed
its rule pending further judicial appeal. The FCC's new vertical
integration rules limit to 40 percent of a system's capacity the
number of channels that can be occupied by a commonly-owned
programmer. These rules are undergoing FCC reconsideration. The
1992 Act grants local franchising authorities certain rights to
deny franchise awards or transfer approvals upon a finding of
common ownership by the applicant of another system in the same
service area or that competition would be reduced or eliminated by
such award or transfer.

Except for rural telephone companies as defined by the FCC, federal
law restricts the ability of telephone companies to engage in cable
television operations within their local service areas.
Specifically, local telephone companies may not provide video
programming, channels of communication, pole or conduit space or
other rental arrangements to an affiliate. The FCC favors
relaxation of this ban and authorizes telephone companies to
provide cable service on a "video dial tone" basis by furnishing
transmission facilities to customers who would distribute
programming. In the FCC's view, neither the phone company nor its
programmer/customer would be subject to local franchise
requirements that would apply to a conventional cable operator.
Legislation which would eliminate or modify this ownership ban has
also been proposed. If the restrictions are relaxed or removed,
cable television companies could face increased competition.
Recently, Bell Atlantic was successful in overturning the 1984
Cable Act cable-telco cross-ownership restrictions on
constitutional grounds. The decision, which is limited in
applications to Bell Atlantic and its subsidiaries, has been
appealed, but other regional Bell Operating Companies have brought
similar challenges in other jurisdictions. (See also Federal
Regulation of Broadcasting, above.) Other measures that would
eliminate barriers to telephone companies' entry into the cable
television business are being considered by Congress.

In 1992 the FCC modified its regulations governing common ownership
or control of cable systems with national television networks. The
new rules allow national television networks to own cable systems
if such a system (when aggregated with all other cable systems in
which the network holds such an interest) does not pass (i) more
than 10 percent of homes passed on a nationwide basis, and (ii) 50
percent of the homes passed within any one Arbitron area of
dominant influence (ADI).

The 1992 Act prohibits, with some exceptions, cable operators from
selling a system within 36 months of acquisition or construction.
Franchise authorities must act within a certain time period to act
on a request for transfer by a cable operator. The FCC has adopted
rules dealing with both of these matters and has them under
consideration.

C. Leased Access. Cable systems with more than 36 activated
channels are required by the 1984 Act to make a certain number of
those channels available for commercial leased access
15
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by third
parties unaffiliated with the system operator. (This provision
does not, however, require a system in operation on or before
December 29, 1984, to delete existing programming that was on the
system before July 1, 1984, to accommodate potential lessees.)
Under the 1992 Act, the FCC must determine maximum reasonable rates
for commercial use of designated channel capacity and establish
reasonable terms and conditions for such use. Parties who believe
they have been denied access wrongfully may petition the FCC for
relief or seek relief in Federal Court.

Under the 1992 Act, Cable operators may prohibit the carriage of
any material deemed to be obscene or otherwise patently offensive
on commercial access channels. Alternatively, cable operators may
place all "indecent" leased access programming on a single channel
and must block the channel unless otherwise requested by a
subscriber. FCC implementing rules allowing cable operators to ban
such programming from access channels were struck down by the
court, which remanded to the FCC regulations dealing with
operators' rights and obligations to sequester certain programming
on a separate channel. The FCC has asked the court for a rehearing
and has stayed enforcement of its rules in the meanwhile.

D. Other Non-Programming Requirements. The 1992 Act mandates
that the FCC modify and adopt new rules regarding frequency
utilization standards for cable systems. The FCC has preempted,
except upon a FCC-granted waiver, state and local authorities from
enforcing technical standards which are more stringent than the
FCC's guidelines.

The 1992 Act requires the FCC to issue regulations to ensure
compatibility between cable systems and television receivers and
video cassette recorders ("VCR"). Regulations shall include, among
other things, requirements that cable operators notify subscribers
if certain functions of television receivers and VCRs are not
compatible with converter boxes. Regulations must also be adopted
to promote the commercial availability of converter boxes and
remote control devices. The FCC will also determine whether, and
under what circumstances, to permit cable operators to scramble
signals.

The FCC issues licenses for microwave relay stations, mobile radios
and receive-only earth stations, all of which are commonly used in
the operation of cable systems. A cable system's failure to comply
with any FCC requirements may result in a variety of sanctions
including monetary fines or revocation or suspension of licenses
for stations used in connection with the system. A cable system's
inability to use a microwave relay station or a mobile radio due to
license revocation could adversely affect system operations,
particularly if the relay microwave is used to provide service to
distant communities or to relay distant television signals to the
system.

The FCC rules contain signal leakage monitoring standards which
must be complied with by all cable systems annually. These
requirements pertain to cable operators' use of certain frequencies
at specified power levels and involve specific testing which must
be completed each year to test for signal leakage.

The FCC currently regulates the rates and conditions imposed by
public utilities for use of their poles, unless under the Federal
Pole Attachments Act state public service commissions are able to
demonstrate that they regulate the cable television pole attachment
rates. Nineteen states (including Illinois among those served by
the Company) have certified to the FCC that they
16
<PAGE>
regulate the
rates, terms and conditions for pole attachments. In the absence
of state regulation, the FCC administers such pole attachment rates
through use of a formula which it has devised. The validity of
this FCC function was upheld by the U.S. Supreme Court.

The 1992 Act and FCC implementing rules expand the cable industry's
Equal Employment Opportunity obligations by requiring cable
companies to provide additional information on race, sex, hiring,
promotion and recruitment practices for six employment positions
that the FCC has identified as performing key management functions.

E. Rate Regulation. The 1992 Act establishes a mechanism for
regulation of the rates charged by a cable operator for its
service. Local regulation of basic (that level of service which
includes broadcast signals) cable rates will be permitted for those
cable systems not subject to "effective competition". The
definition of "effective competition" (fewer than 30 percent of the
households in the service area subscribe; or at least 50 percent of
the households in the service area are served by two multichannel
video programming distributors and at least 15 percent subscribe to
the smaller operator; or a franchising authority serves as a
multichannel video programming distributor and offers service to at
least 50 percent of the households) ensures that virtually all
cable systems are now subject to rate regulation. In order to
regulate rates for the basic tier of service and related equipment,
local officials must request FCC certification and must follow
detailed FCC guidelines and procedures to determine whether the
rates in question conform to a highly complex, FCC-approved
"benchmark" or, if rates exceed the benchmark, whether the operator
can justify them with a cost-of-service showing. FCC rules also
limit related rates, including those for set-top converters,
additional outlets and home wiring, to cost, plus a modest element
of profit. Rates for expanded tiers of service (other than pay
channels or pay-per-view) are subject to the same benchmark or
cost-of-service standards as basic rates, but compliance is
enforced by the FCC in response to complaints by subscribers or the
local franchising authority. Although the new rules eventually
will permit cable companies periodic rate increases for inflation
and certain external costs, a rate freeze imposed by the FCC in May
1993 has been extended several times and continues in effect. On
February 22, 1994, the FCC announced several decisions relating to
cable rates including revisions to its "benchmark" approach. New
benchmark formulas will be issued to reflect a new competitive
differential -- that is, the average amount by which rates charged
by cable operators not subject to effective competition exceeds
"reasonable" rates - of 17 percent, rather than the 10 percent
previously found by the FCC. In addition, the FCC altered its
treatment of packages of a la carte channels. New rules will be
issued setting forth factors that will be used, on a case-by-case
basis, to determine whether an a la carte package "enhances
subscriber choice" or "evades" rate regulation. Procedures for
adding channels were adopted to permit operators to recover their
programming costs, a markup of 7.5 percent on the programming, and
some portion of the benchmark per channel rate. The FCC also
adopted "interim" rules to govern cable operator cost-of-service
showings, based on principles similar to those used in the
telephone regulatory context. It set an interim industry-wide rate
of return of 11.25 percent. The new rules also will include
"streamlined" cost-of-service showings for upgrades and an
experimental incentive upgrade plan.

Taken as a whole, the new regulations have compelled significant
changes in the Company's operations including restructuring of the
Company's service offerings and reduced rates for the reconstituted
basic service. Additional changes are likely as a result of the
February 1994 decisions. The ultimate impact of these regulations
cannot be predicted at this time because many aspects of the
regulatory scheme are under reconsideration by the FCC, are under
judicial
17
<PAGE>
challenge, or have yet to be adopted by the FCC.

F. Franchise Fees and Access. Although franchising
authorities may impose franchise fees under the 1984 Act, such
payments cannot exceed five percent of system revenues per year.
Franchising authorities are also empowered to require that the
operator provide certain cable-related facilities, equipment and
services to the public and to enforce operator compliance with
franchise requirements and voluntary commitments. The 1992 Act
permits cable operators to itemize on its subscriber bills amounts
assessed as a franchise fee or dedicated to certain franchisor-
imposed requirements. When changed circumstances render compliance
with such requirements commercially impracticable, the 1984 Act
requires franchising authorities to renegotiate performance
standards and, under certain conditions, permits the operator to
make changes in program commitments without local approval.

Although franchising authorities are permitted to require and
enforce the dedication of system channels for non-commercial
public, educational and governmental access use, they must permit
the operator to make other use of such channels until the demand
for use of designated access purposes is sufficient to occupy the
dedicated capacity. In addition, if the franchising authority
requires or the operator volunteers to provide free services or
financial support for non-commercial access users, the value of
such commitments must be credited toward the franchise fee payment.

G. Local Franchising. Because a cable distribution system
uses local streets and rights-of-way, cable television systems have
been subject to state and local regulation, typically imposed
through the franchising process. State and local officials have
been involved in franchisee selection, system design and
construction, safety, service rates, consumer relations and billing
practices and community-related programming and services. Except
for cable systems lawfully operating without a franchise on or
before July 1, 1984, the 1984 Act requires that a cable operator
obtain a franchise prior to instituting service. Under the 1992
Act, franchising authorities may not award an exclusive franchise
or unreasonably deny a competitive franchise. Local authorities
may, without obtaining a franchise, operate their own cable system,
notwithstanding the granting of one or more franchises by a local
authority.

The FCC has adopted rules which establish minimum customer service
requirements. However, the 1992 Act permits local franchising
authorities to establish, in excess of or in addition to those of
the FCC, certain customer service requirements regarding such
matters as office hours, telephone availability and service calls.

H. Renewal. The 1992 Act did not significantly alter the
procedures for the renewal of cable television franchises which
provide an incumbent franchisee certain protections against having
its franchise renewal application denied. These procedures are
designed to provide the incumbent franchisee with a fair hearing on
past performance, an opportunity to present a renewal proposal and
to have it fairly and carefully considered, and a right of appeal
if the franchising authority either fails to follow the procedures
or denies renewal unfairly. Nevertheless, renewal is not assured,
as the franchisee must meet certain statutory and franchise
standards. Moreover, even if a franchise is renewed, the
franchising authority may attempt to impose new and more onerous
requirements such as significant upgrading of facilities and
services or higher franchise fees as a condition of renewal.
18
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I. Theft of Cable Service and Unauthorized Reception of
Satellite Programming. The 1984 Act addresses the problem of
unauthorized connections to cable systems and the use of private
earth stations capable of receiving many of the attractive
satellite-delivered program services offered by cable systems
without payment to or authorization of the program owner. Both of
these practices are potential sources of significant revenue loss
for cable systems. The 1992 Act has raised the penalties for
engaging in theft of service and the manufacturing or sale of
devices used to assist theft of service. However, it is not a
violation to receive satellite-delivered programming by private
earth stations without permission, if the program signal in
question is not scrambled (transmitted in an encoded form which
cannot be received without special decoding equipment), and the
program owner has no specific marketing arrangement in place for
granting such user permission.

J. Copyright. Cable television systems are subject to a
federal copyright licensing scheme covering carriage of television
broadcast signals. In exchange for contributing a percentage of
their revenues to a federal copyright royalty pool, cable operators
receive blanket permission (a "compulsory license") to retransmit
copyrighted material in broadcast signals. The amount of this
royalty payment varies depending on the amount of system revenues
from certain sources, the number of distant signals carried and the
location of the cable system with respect to over-the-air
television markets. Royalty rates paid by operators are subject to
periodic adjustment by a copyright arbitration royalty panel, which
can be convened by the Librarian of Congress when necessary in
order to compensate for the effects of national monetary inflation
and for FCC rule changes that increase the amount of television
broadcast signals that cable systems carry. Legislative proposals
have been and continue to be made to simplify or eliminate the
compulsory license. The FCC has recommended to Congress that the
compulsory license for the carriage of distant broadcast signals be
eliminated. In addition, the full impact of the 1992 Act's
retransmission consent provision is unclear. Therefore, the nature
or amount of future payments for broadcast signal carriage cannot
be predicted at this time. For the copyrighted materials they use
in carriage or origination of non-broadcast programming, cable
systems, like broadcasters, must have the permission of each
copyright holder. System compliance with both the statutory
copyright license and provisions of the Copyright Act of 1976
requiring private clearance is enforced through copyright
infringement litigation brought by either the copyright holder or
its representative or, in the case of violations of the statutory
copyright license, by a local broadcaster or the copyright holder.

K. Regulatory Change. Since its adoption in 1984, the Cable
Act has been shaped by FCC regulations and by judicial
interpretation. The 1992 Act has resulted in significant changes
in the operation of cable television systems. As discussed above,
the FCC has been charged with adopting rules and regulations and
implementing the new provisions, although at present it is
difficult to predict the ultimate course of such rules and
regulations. Additionally, major provisions of the 1992 Act have
been challenged in the courts, most significantly, the must-carry,
retransmission consent and rate regulation provisions. It is
likely that FCC regulations will also be challenged in court.
Until the FCC has concluded its rule-making proceedings and the
courts have adjudicated the issues presented to them, it would be
premature to assess the full impact of the 1992 Act on the Company.

The foregoing does not purport to be a complete summary of all
present and proposed federal, state and local regulations relating
to the cable industry.
19
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Item 2. Properties.

The Company owns all of its newspaper publishing plants and
properties; 222,000 square feet in Greenville, South Carolina;
124,000 square feet in Montgomery, Alabama; 91,000 square feet in
Asheville, North Carolina; 65,000 square feet in Clarksville,
Tennessee; 27,000 square feet in Staunton, Virginia; 19,000 square
feet in Gallipolis, Ohio; 11,000 square feet in Moultrie, Georgia;
and 14,000 square feet in Mountain Home, Arkansas. In addition,
the Company leases approximately 30,000 square feet of newspaper
production and office space in Alabama, North Carolina, South
Carolina and Tennessee.

The Company's Montgomery, Alabama, newspaper has begun a $15
million capital project to purchase a new press and upgrade its
production plant with $4 million to be invested in 1994.
In its broadcasting operations, the Company owns buildings with
approximately 68,000 square feet in St. Louis, Missouri; 12,000
square feet in Cincinnati, Ohio; 39,000 square feet in Knoxville,
Tennessee; 10,000 square feet in Greenville, South Carolina; and
28,000 square feet in Macon, Georgia. The Company leases its
studio buildings in Cincinnati and Cleveland.

The Company owns all of its cable television systems and equipment.
The Company leases certain offices and tower sites. The Company
owns the offices in Wichita, Great Bend and McPherson, Kansas;
Edmond and Bixby, Oklahoma; Oak Lawn and Harvey, Illinois; Rocky
Mount, New Bern, Greenville, Washington and Kinston, North
Carolina; and Laporte, Indiana.

In its entertainment operations, the Company leases approximately
16,000 square feet in New York, New York, and 13,000 square feet in
Los Angeles, California.

In its security operations, the Company leases office space in
Oklahoma City, Oklahoma; Dallas and Houston, Texas; Miami, Florida;
Chicago, Illinois; and St. Louis, Missouri. The central monitoring
station is located in the Company's cable television headquarters
in Wichita, Kansas.

Except as noted above, the Company generally owns the equipment
used in its newspaper, broadcasting, cable, entertainment and
security operations.

The Company believes that all of its properties are in good
condition, well maintained and adequate for its current operations.

Item 3. Legal Proceedings.

The Company from time to time becomes involved in litigation
incidental to its business, including libel actions. In the
opinion of management, the Company carries adequate insurance
against any judgments of material amounts which are likely to be
recovered in such actions. At the present time, the Company is not
a party to any litigation in which it is anticipated that the
amount of any likely recovery would have a material adverse effect
on its financial position.

Item 4. Submission of Matters to a Vote of Security Holders.

Not applicable.
20
<PAGE>
PART II.

Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters.

The Company's Common Stock is traded in the National Market System
over-the-counter market and appears on The National Association of
Securities Dealers Automated Quotation ("NASDAQ") under the symbol
MMEDC.

The following table sets forth the range of closing high and low
bid prices for the Company's Common Stock in the over-the-counter
market by quarter since January 1, 1992. The prices were reported
by The NASDAQ Information Exchange System. These prices represent
prices between dealers in securities and, as such, do not include
retail mark-ups, mark-downs, or commissions and do not necessarily
represent actual transactions.

Low Bid High Bid
1993:
First Quarter $32.00 $36.25
Second Quarter $32.00 $38.00
Third Quarter $30.75 $36.75
Fourth Quarter $33.50 $39.00
1992:
First Quarter $23.00 $28.00
Second Quarter $26.00 $29.00
Third Quarter $23.50 $28.75
Fourth Quarter $24.00 $32.00

The Company's Credit and Note Agreements limit the payment of
dividends on any capital stock of the Company. Currently the most
restrictive of these limits the annual payment of dividends to 25%
of annualized net income. No dividends were declared or paid
during 1993 or 1992. The Company has no intention of paying any
cash dividends in the foreseeable future. (See Note 6 to the
Consolidated Financial Statements included in the 1993 Annual
Report, which material is incorporated herein by reference.)

As of March 3, 1994, there were approximately 1,200 record holders
of the Company's Common Stock.

Item 6. Selected Financial Data.

The required information is set forth on pages 18 and 19 of the
accompanying 1993 Annual Report, which material is incorporated
herein by reference.

Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.

The required information is set forth on pages 16 through 23 of the
accompanying 1993 Annual Report, which material is incorporated
herein by reference.
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Item 8. Financial Statements and Supplementary Data.

The following information is set forth in the accompanying 1993
Annual Report, which material is incorporated herein by reference:

All Consolidated Financial Statements of Multimedia, Inc. and
Subsidiaries (pages 24 through 27); all Notes to Consolidated
Financial Statements (pages 28 through 41); and the "Independent
Auditors' Report" (page 42).

With the exception of the information herein expressly incorporated
by reference, the 1993 Annual Report of the Registrant is not
deemed filed as part of this Annual Report on Form 10-K.

Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.

None.

PART III.

Item 10. Directors and Executive Officers of the Registrant.

The required information is incorporated herein by reference from
the information in the Company's definitive proxy statement dated
March 15, 1994, for the Annual Meeting of Shareholders to be held
April 20, 1994, under the headings "Election of Directors" and
"Executive Officers".

Item 11. Executive Compensation.

Item 12. Security Ownership of Certain Beneficial Owners and
Management.

Item 13. Certain Relationships and Related Transactions.

PART IV.

Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K.

(a) (1) The following consolidated financial statements are
incorporated by reference from the 1993 Annual Report
attached hereto:

Consolidated Statements of Earnings, years ended December
31, 1993, 1992 and 1991

Consolidated Statements of Stockholders' Equity (Deficit),
years ended December 31, 1993, 1992 and 1991

Consolidated Statements of Cash Flows, years ended December
31, 1993, 1992 and 1991

Consolidated Balance Sheets, December 31, 1993 and 1992

Notes to Consolidated Financial Statements

Independent Auditors' Report

(a) (2) The following auditors' report and financial schedules for
years ended December 31, 1993, 1992 and 1991 are submitted
herewith:

Independent Auditors' Report on 10-K Schedules

Schedule V - Property, Plant and Equipment

Schedule VI - Accumulated Depreciation - Property, Plant
and Equipment

Schedule VIII - Valuation and Qualifying Accounts

Schedule X - Supplementary Income Statement Information

All other schedules are omitted as the required information
is inapplicable or the information is presented in the
financial statements or related notes.

(a) (3) Exhibits:

(2) See Exhibit 10.8.

(3.1) Restated Articles of Incorporation of the Company filed
on December 22, 1967, in the office of the Secretary of
State of South Carolina: Incorporated by reference to
Exhibit 4.4 to the Company's Registration Statement on
Form S-3, No. 33-9622.
23
<PAGE>
(3.2) Amendments to the Company's Restated Articles of
Incorporation filed on June 27, 1969; April 20, 1972;
April 25, 1978; May 1, 1980; and May 13, 1983, in the
office of the Secretary of State of South Carolina:
Incorporated by reference to Exhibit 4.5 to the Company's
Registration Statement on Form S-3, No. 33-9622.

(3.3) Amendment to the Company's Restated Articles of
Incorporation attached as Annex B to Articles of Merger
filed on October 1, 1985, in the office of the Secretary
of State of South Carolina: Incorporated by reference to
Exhibit 4.6 to the Company's Registration Statement on
Form S-3, No. 33-9622.

(3.4) Articles of Amendment filed February 8, 1990, in the
office of the Secretary of State of South Carolina:
Incorporated by reference to Exhibit 3.4 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1989 ("1989 Form 10-K") (File No. 0-6265).

(3.5) Articles of Amendment to the Company's Restated Articles
of Incorporation filed April 18, 1991, in the office of
the Secretary of State of South Carolina: Incorporated
by reference to Exhibit 4.1.4 to the Company's
Registration Statement on Form S-8, File No. 33-40050
("S-8 No. 33-40050").

(3.6) By-laws of the Company: Incorporated by reference to
Exhibit 3.3 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1985 ("1985 Form 10-K")
(File No. 0-6265).

(3.6.1) Amendment to By-laws of the Company, effective April 23,
1992: Incorporated by reference to Exhibit 4.2.1 to the
Company's Registration Statement on Form S-3, File No.
33-46557.

(3.6.2) Amendment to By-laws of the Company, effective December
10, 1993.

(4.1) See Exhibits 3.1, 3.2, 3.3, 3.4, 3.5, 3.6, 3.6.1, 3.6.2,
10.5 and 10.7.

(4.2) Form of Certificates for Common Stock: Incorporated by
reference to Exhibit 4.2 to the Company's Form 10-K for
the year ended December 31, 1992 ("1992 Form 10-K") (File
No. 0-6265).

(4.3) Rights agreement, dated as of September 6, 1989, by and
between the Company and South Carolina National Bank,
Rights agent: Incorporated by reference to Exhibit 1 to
Form 8-K of the Company dated September 6, 1989.

(4.4) The Company hereby agrees to furnish to the Securities
and Exchange Commission, upon request of the Commission,
a copy of any instrument with respect to long-term debt
not being registered in a principal amount less than 10%
of the total assets of the Company and its subsidiaries
on a consolidated basis.

(10.1)* Restricted Option Plan of the Company:
Incorporated by reference to Exhibit 10.1 to the
Company's 1985 Form 10-K.
24
<PAGE>

(10.2)* Performance Stock Option Plan of the Company:
Incorporated by reference to Exhibit 10.2 to the
Company's Form 10-K for the year ended December 31,
1987 (File No. 0-6265).

(10.2.1)* Amendment of Performance Stock Option Plan:
Incorporated by reference to Exhibit 10.2.1 to the
Company's Form 10-K for the year ended December 31,
1988 ("1988 Form 10-K") (File No. 0-6265).

(10.3)* Key Executive Stock Option Plan of the Company:
Incorporated by reference to Exhibit 28.1 to the
Company's Registration Statement on Form S-8, No.
33-17234.

(10.4)* Director Stock Option Plan: Incorporated by
reference to Exhibit 10.20 to 1992 Form 10-K.

(10.5) Credit Agreement between the Company and the Chase
Manhattan Bank (National Association) and Citibank, N.A.
as Lead Agents, the First National Bank of Chicago, First
Union National Bank of North Carolina and the Toronto-
Dominion Bank, Cayman Islands Branch, as Co-Agents and
the Chase Manhattan Bank (National Association), as
Administrative Agent, and various banks (excluding
schedules and certain exhibits); the Registrant agrees to
furnish supplementally to the Securities and Exchange
Commission a copy of any omitted Schedule or Exhibit upon
request of the Commission: Incorporated by reference to
Exhibit 4.1 of the Company's 1990 second quarter Form 10-Q
(File No. 0-6265).

(10.5.1) List of Lenders under Credit Agreement as of March 3, 1994.

(10.6) Contract for Services between Multimedia Entertainment,
Inc. and Phillip J. Donahue, dated as of April 15, 1982,
as amended by letter agreements dated April 15, 1982,
February 10, 1984, and August 6, 1985: Incorporated by
reference to Exhibit 10.6 to the Company's 1985 Form 10-K.
Portions of this exhibit have been omitted and are
the subject of an order of the United States Securities
and Exchange Commission granting the Company's request
for confidential treatment.

(10.6.1) Amendment to Contract for Services: Incorporated by
reference to Exhibit 10.6.1 to the Company's 1988 Form
10-K. Portions of this exhibit have been omitted and are
the subject of an order of the United States Securities
and Exchange Commission granting the Company's request
for confidential treatment.

(10.6.2) Amendment to Contract for Services: Incorporated by
reference to Exhibit 10.6.2 to the Company's quarterly
report on Form 10-Q for the quarter ended June 30, 1991.
Portions of this exhibit have been omitted and are the
subject of an order of the United States Securities and
Exchange Commission granting the Company's request for
confidential treatment.
25
<PAGE>
(10.6.3) 1993 Amendment to Contract for services: Incorporated by
reference to Exhibit 10.6.3 to the Company's quarterly
report on Form 10-Q for the quarter ended June 30, 1993.
Portions of this exhibit have been omitted and are the
subject of an order of the United States Securities and
Exchange Commission granting the Company's request for
confidential treatment.

(10.7) Form of Note Agreement between the Company and various
institutional holders (excluding schedules and certain
exhibits); the Registrant agrees to furnish
supplementally to the Securities and Exchange Commission
a copy of any omitted schedule or exhibit upon request of
the Commission: Incorporated by reference to Exhibit 4.2
of the Company's 1990 second quarter Form 10-Q.

(10.8) Recapitalization Agreement and Plan of Merger, dated May
1, 1985, as amended and restated between MM Acquiring
Corp. and the Company: Incorporated by reference to
Exhibit 2 to the Company's Registration Statement on Form
S-14 dated August 20, 1985 (Registration No. 2-99786).

(10.9)* Executive Salary Protection Plan: Incorporated by
reference to Exhibit 10.15 to the Company's Form
10-K for the year ended December 31, 1986.

(10.10)* Executive Salary Protection Agreement - First
Amendment: Incorporated by reference to Exhibit
10.10 to the Company's Form 10-K for the year ended
December 31, 1991 ("1991 Form 10-K").

(10.11) Purchase Agreement by and between Multimedia, Inc. and
National Broadcasting Company, Inc.: Incorporated by
reference to Exhibit 10.1 to the Company's Form 10-Q for
the quarter ended September 30, 1990.

(10.12) Exchange Agreement between National Broadcasting Company,
Inc. and Multimedia, Inc.: Incorporated by reference to
Exhibit 10.2 to the Company's Form 10-Q for the quarter
ended September 30, 1990 (File No. 0-6265).

(10.13)* 1991 Stock Option Plan: Incorporated by reference
to Exhibit 10.15 to the Company's Form 10-K for the
year ended December 31, 1990 (File No. 0-6265).

(10.13.1)* Amendment to 1991 Stock Option Plan: Incorporated
by reference to Exhibit 28.2 to S-8 No. 33-40050.

(10.13.2)* Amendments to 1991 Stock Option Plan, dated as of
February 24, 1993: Incorporated by reference to
Exhibit 10.13.2 to the 1992 Form 10-K.

(10.14)* Management Committee Incentive Plan: Incorporated
by reference to Exhibit 10.14 to 1991 Form 10-K.

(10.15)* Executive Incentive Plan: Incorporated by
reference to Exhibit 10.15 to 1991 Form 10-K.
26
<PAGE>

(10.16)* Summary of Supplemental Retirement Program for
Messrs. Bartlett and Sbarra: Incorporated by
reference to Exhibit 10.16 to 1991 Form 10-K.

(10.17)* Agreements between Multimedia, Inc. and J. William
Grimes dated August 6 and September 20, 1991:
Incorporated by reference to Exhibit 10.16 to the
Company's quarterly report on Form 10-Q for the
quarter ended September 30, 1991 (File No. 0-6265).

(10.17.1)* Resolution of Board of Directors relating to J.
William Grimes, adopted April 23, 1992:
Incorporated by reference to Exhibit 10.7.1 to the
Company's Form 10-Q for the quarter ended March 31,
1992.

(10.17.2)* Resolution of Board of Directors relating to J.
William Grimes, adopted December 18, 1992:
Incorporated by reference to Exhibit 10.17.2 to
1992 Form 10-K.

(10.17.3)* Resignation and release agreement between
Multimedia, Inc. and J. William Grimes dated
December 9, 1993.

(10.18)* Agreement with Robert L. Turner, dated January 29,
1991: Incorporated by reference to Exhibit 10.18
to 1991 Form 10-K.

(10.19) Contract for Services between Multimedia Entertainment,
Inc. and Rabbit Ears Enterprises, f/s/o Sally Jessy
Raphael, dated as of April 26, 1989, as amended by letter
dated December 4, 1990: Incorporated by reference to
Exhibit 10.19 to 1991 Form 10-K. Portions of this exhibit
have been omitted and are the subject of an order of the
United States Securities and Exchange Commission granting
the Company's request for confidential treatment.

(10.19.1) Agreement between Multimedia Entertainment, Inc. and
Wonderland Entertainment, f/s/o Sally Jessy Raphael,
dated as of August 17, 1993: Incorporated by reference
to Exhibit 10.19.1 to the Company's Form 10-Q for the
quarter ended September 30, 1993. Portions of this
exhibit have been omitted and are the subject of an order
of the United States Securities and Exchange Commission
granting the Company's request for confidential
treatment.

(10.20) Asset Purchase and Sale Agreement by and between Prime
Cable Income Partners, L.P., as seller and Tar River
Communications, Inc., as buyer, relating to Valparaiso
and Laporte, Indiana systems dated as of July 30, 1992,
as amended by letter supplement dated as of December 3,
1992: Incorporated by reference to Exhibits to Form 8-K
dated December 16, 1992.

(11) Computation of Primary and Fully Diluted Earnings per
Share.

(13) 1993 Annual Report.

(21) Subsidiaries of the Registrant.
27
<PAGE>
(23) Accountants' Consent to incorporate by reference in
Registration Statements No. 2-68069, 33-17234, 33-40050,
33-40253, 33-61574 and 33-61462, on Form S-8, and in
Registration Statements No. 33-42179 and 33-46557 on Form
S-3.

(99) Proxy Statement dated March 15, 1994.
________________________
* This is a management contract or compensatory plan or arrangement.

28
<PAGE>
(b) Reports on Form 8-K.

Items reported on Form 8-K dated December 10, 1993:

(5) Other Events
(7) Exhibits
29
<PAGE>
<PAGE>

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

MULTIMEDIA, INC.
By:

Signature Title Date

/s/ Walter E. Bartlett Chairman, Chief March 28, 1994
Walter E. Bartlett Executive Officer
and President

/s/ Robert E. Hamby, Jr. Senior Vice President March 28, 1994
Robert E. Hamby, Jr. Finance and Administration
and Chief Financial
Officer

/s/ Thomas L. Magaha Vice President March 28, 1994
Thomas L. Magaha Finance and Development/
Controller

Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities as of the dates
indicated.

By:

/s/ Walter E. Bartlett Director March 28, 1994
Walter E. Bartlett

/s/ Rhea T. Eskew Director March 28, 1994
Rhea T. Eskew

/s/ David L. Freeman Director March 28, 1994
David L. Freeman

/s/ Robert E. Hamby, Jr. Director March 28, 1994
Robert E. Hamby, Jr.

/s/ Donald D. Sbarra Director March 28, 1994
Donald D. Sbarra

/s/ Elizabeth P. Stall Director March 28, 1994
Elizabeth P. Stall
<PAGE>

INDEPENDENT AUDITORS' REPORT ON 10-K SCHEDULES

The Board of Directors and Stockholders
Multimedia, Inc.:

Under the date of February 11, 1994, we reported on the
consolidated balance sheets of Multimedia, Inc. and subsidiaries as
of December 31, 1993 and 1992 and the related consolidated
statements of earnings, stockholders' equity (deficit), and cash
flows for each of the years in the three-year period ended December
31, 1993, as contained in the 1993 annual reports to stockholders.
These consolidated financial statements and our report thereon are
incorporated by reference in the annual report on Form 10-K for the
year 1993. In connection with our audits of the aforementioned
consolidated financial statements, we also have audited the
financial statement schedules as listed in Item 4(a)(2). These
financial statement schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion
on these financial statement schedules based on our audits.

In our opinion, such financial statement schedules, when considered
in relation to the basic consolidated financial statement taken as
a whole, present fairly, in all material respects, the information
set forth therein.

(signature of KPMG Peat Marwick appears here)

Greenville, South Carolina
February 11, 1994
<PAGE>

Schedule V

MULTIMEDIA, INC. AND SUBSIDIARIES
Property, Plant and Equipment
Years ended December 31, 1993, 1992 and 1991
<TABLE>
<CAPTION>
Other
Balance at Additions Retirements Changes
Beginning During Year or Sales During Balance at
of Year At Cost During Year Year (A) End of Year
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1993:
Land and land improvements $ 5,222,000 96,000 20,000 15,000 5,313,000
Buildings 38,713,000 466,000 219,000 195,000 39,155,000
Broadcasting equipment 63,100,000 3,466,000 13,478,000 810,000 53,898,000
Publishing equipment 57,566,000 2,075,000 922,000 (120,000) 58,599,000
Cablevision equipment 243,240,000 30,533,000 7,913,000 7,039,000 272,899,000
Other equipment and fixtures 55,171,000 9,468,000 2,538,000 6,458,000 68,559,000
Construction in progress 436,000 1,274,000 --- --- 1,710,000
----------- ----------- ----------- ----------- -----------
$463,448,000 47,378,000 25,090,000 14,397,000 500,133,000
=========== =========== =========== =========== ===========

Year ended December 31, 1992:
Land and land improvements $ 5,166,000 18,000 4,000 42,000 5,222,000
Buildings 37,465,000 1,102,000 138,000 284,000 38,713,000
Broadcasting equipment 60,880,000 3,695,000 1,288,000 (187,000) 63,100,000
Publishing equipment 53,367,000 6,269,000 2,070,000 --- 57,566,000
Cablevision equipment 205,656,000 20,532,000 1,838,000 18,890,000 243,240,000
Other equipment and fixtures 43,282,000 6,632,000 1,743,000 7,000,000 55,171,000
Construction in progress 1,221,000 (755,000) --- (30,000) 436,000
----------- ----------- ----------- ----------- -----------
$407,037,000 37,493,000 7,081,000 25,999,000 463,448,000
=========== =========== =========== =========== ===========

Year ended December 31, 1991:
Land and land improvements $ 5,021,000 102,000 --- 43,000 5,166,000
Buildings 37,150,000 1,556,000 201,000 (1,040,000) 37,465,000
Broadcasting equipment 58,321,000 3,042,000 1,156,000 673,000 60,880,000
Publishing equipment 52,109,000 2,879,000 1,621,000 --- 53,367,000
Cablevision equipment 188,517,000 18,543,000 1,404,000 --- 205,656,000
Other equipment and fixtures 35,548,000 6,796,000 1,681,000 2,619,000 43,282,000
Construction in progress 1,951,000 (731,000) --- 1,000 1,221,000
----------- ----------- ----------- ----------- -----------
$378,617,000 32,187,000 6,063,000 2,296,000 407,037,000
=========== =========== =========== =========== ===========
Note:
(A) Other changes include reclassifications from other asset accounts, reclassifications between
categories and property, plant and equipment of acquired companies, recorded
principally at fair market values.
</TABLE>
<PAGE>
Schedule VI

MULTIMEDIA, INC. AND SUBSIDIARIES
Accumulated Depreciation - Property, Plant and Equipment
Years ended December 31, 1993, 1992 and 1991
<TABLE>
<CAPTION>
Other
Balance At Charged To Retirements Changes
Beginning Costs and or Sales During Balance At
of Year Expenses (A) During Year Year (B) End of Year
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1993:
Land improvements $ 331,000 39,000 10,000 -- 360,000
Buildings 17,452,000 1,346,000 177,000 19,000 18,640,000
Broadcasting equipment 47,460,000 3,838,000 11,265,000 324,000 40,357,000
Publishing equipment 29,214,000 3,881,000 900,000 (1,000) 32,194,000
Cablevision equipment 123,840,000 20,218,000 6,710,000 -- 137,348,000
Other equipment and fixtures 26,641,000 6,100,000 2,346,000 77,000 30,472,000
----------- ----------- ----------- ----------- -----------
$244,938,000 35,422,000 21,408,000 419,000 259,371,000
=========== =========== =========== =========== ===========

Year ended December 31, 1992:
Land improvements $ 295,000 40,000 4,000 -- 331,000
Buildings 16,249,000 1,340,000 137,000 -- 17,452,000
Broadcasting equipment 44,248,000 4,583,000 1,231,000 (140,000) 47,460,000
Publishing equipment 27,407,000 3,694,000 1,888,000 1,000 29,214,000
Cablevision equipment 108,439,000 16,989,000 1,589,000 1,000 123,840,000
Other equipment and fixtures 22,923,000 5,064,000 1,568,000 222,000 26,641,000
----------- ----------- ----------- ----------- -----------
$219,561,000 31,710,000 6,417,000 84,000 244,938,000
=========== =========== =========== =========== ===========

Year ended December 31, 1991:
Land improvements $ 230,000 36,000 -- 29,000 295,000
Buildings 15,695,000 1,270,000 181,000 (535,000) 16,249,000
Broadcasting equipment 41,274,000 5,085,000 1,145,000 (966,000) 44,248,000
Publishing equipment 25,646,000 3,321,000 1,560,000 -- 27,407,000
Cablevision equipment 94,252,000 15,346,000 1,159,000 -- 108,439,000
Other equipment and fixtures 18,868,000 4,082,000 1,499,000 1,472,000 22,923,000
----------- ----------- ----------- ----------- -----------
$195,965,000 29,140,000 5,544,000 -- 219,561,000
=========== =========== =========== =========== ===========

Notes:
(A) Depreciation for financial reporting purposes is calculated principally on the straight-line basis
over the estimated useful lives of the respective assets. The useful lives of the assets range
from 10 to 15 years for land improvements; 15-40 years for buildings; 3-25 years for broadcasting
equipment; 3-20 years for publishing equipment; 5-20 years for cablevision equipment and 3-15
years for other equipment and fixtures.
(B) Other changes represent accumulated depreciation from reclassifications
between categories and accumulated depreciation on property, plant and
equipment of acquired companies.
</TABLE>
<PAGE>
Schedule VIII
MULTIMEDIA, INC. AND SUBSIDIARIES

Valuation and Qualifying Accounts

Years ended December 31, 1993, 1992 and 1991

<TABLE>
<CAPTION>
Additions
Balance at Charged to Collection Deductions Balance at
Beginning Costs and of from End of
of Year Expenses Writeoffs Reserves Year

<S> <C> <C> <C> <C> <C>
Year ended December 31, 1993:
Allowance for discounts $ 54,000 850,000 -- 786,000 118,000
Allowance for doubtful
accounts 3,891,000 3,875,000 620,000 4,791,000 3,595,000
--------- --------- --------- --------- ---------
$3,945,000 4,725,000 620,000 5,577,000 3,713,000
========= ========= ========= ========= =========

Year ended December 31, 1992:
Allowance for discounts $ 14,000 902,000 -- 862,000 54,000
Allowance for doubtful
accounts 3,371,000 4,112,000 584,000 4,176,000 3,891,000
--------- --------- --------- --------- ---------
$3,385,000 5,014,000 584,000 5,038,000 3,945,000
========= ========= ========= ========= =========

Year ended December 31, 1991:
Allowance for discounts $ 52,000 964,000 -- 1,002,000 14,000
Allowance for doubtful
accounts 3,454,000 4,493,000 494,000 5,070,000 3,371,000
--------- --------- --------- --------- ---------
$3,506,000 5,457,000 494,000 6,072,000 3,385,000
========= ========= ========= ========= =========
</TABLE>
<PAGE>

Schedule X

MULTIMEDIA, INC. AND SUBSIDIARIES

Supplementary Income Statement Information

Years ended December 31, 1993, 1992 and 1991

Charged directly to
Costs and Expenses

1993 1992 1991

Amortization of intangible
assets $14,778,000 11,272,000 9,308,000
========== ========== =========

Advertising costs $11,099,000 9,669,000 8,785,000
========== ========== =========

All other information is inapplicable or less than one percent of total
revenue.

Exhibit 3.6.2

MULTIMEDIA, INC.

Board of Directors' Resolution

RESOLVED, that the bylaws of the corporation are amended
to provide, in lieu of the language presently contained in
Article III Section 2(d), the following:

With the exception of the members of the board who are
elected officers of the corporation, no person shall be
elected, appointed or serve as a director until he
reaches the age of twenty-five years or after the annual
meeting of the shareholders' next succeeding the earlier
of his seventy-second birthday or the twenty-fifth
anniversary of his service as a member of the board of
directors.

Adopted December 10, 1993.

Exhibit 10.5.1

LIST OF LENDERS UNDER CREDIT AGREEMENT
AS OF MARCH 3, 1994

Commitments
Bank Current %

Bank of America $ 17,430,000 3.00%
Bank of California, N.A. 12,450,000 2.14%
Bank of Hawaii 12,450,000 2.14%
Bank of Montreal 17,430,000 3.00%
Bank of New York 17,430,000 3.00%
Bank of Nova Scotia 17,430,000 3.00%
Bankers Trust Company 12,450,000 2.14%
Banque Paribas 12,450,000 2.14%
Chase Manhattan Bank, N.A. 16,600,000 2.86%
Citibank, N.A. 12,450,000 2.14%
Credit Lyonnais 24,900,000 4.29%
Crestar Bank 12,450,000 2.14%
First National Bank of Chicago 16,600,000 2.86%
First Union National Bank of NC 29,050,000 5.00%
Industrial Bank of Japan 25,730,000 4.43%
LTCB Trust Company 12,450,000 2.14%
Mellon Bank 12,450,000 2.14%
Mitsubishi Trust & Banking Corp. 16,600,000 2.86%
National Westminster Bank USA 12,450,000 2.14%
NationsBank of Georgia, N.A. 12,450,000 2.14%
NationsBank of Texas, N.A. 17,430,000 3.00%
Nippon Credit Bank, Ltd. 14,940,000 2.57%
Philadelphia National Bank 12,450,000 2.14%
PNC Bank, N.A. 12,450,000 2.14%
Royal Bank of Canada 12,450,000 2.14%
Sakura Bank, Ltd. 12,450,000 2.14%
Shawmut Bank Connecticut, N.A. 29,050,000 5.00%
South Carolina National Bank 12,450,000 2.14%
Sumitomo Bank, Ltd. 16,600,000 2.86%
Tokai Bank, Ltd. 12,450,000 2.14%
Toronto-Dominion Bank 45,650,000 7.86%
Union Bank 12,450,000 2.14%
Wachovia Bank of NC 46,480,000 8.00%
----------- ------
$581,000,000 100.00%
=========== ======

AGREEMENT OF RESIGNATION AND RELEASE
Whereas, the undersigned, J. William Grimes (hereinafter
called "Employee"), is resigning all of his positions with
Multimedia, Inc., and its subsidiaries and other affiliates
(hereinafter called "Employer"); and
Whereas, Employer wishes to provide some assistance to said
Employee in the transition period following his resignation;
NOW THEREFORE, in consideration of the mutual covenants set
forth herein, it is agreed by and between Employer and Employee
as follows:
1. Employee does hereby tender to Employer and Employer does
hereby accept his resignation, effective as of the date
hereof, as officer, director, committee member and employee
of Multimedia, Inc. and its subsidiaries and any foundation
or any other affiliates of the company; and, Employee shall
not be eligible for any executive employee benefits or other
employee benefits including, but not limited to, the
executive salary protection plan and the executive medical
reimbursement plan, after the date hereof, except as may be
provided by law.
2. Employer and Employee do hereby warrant and affirm that this
Agreement of Resignation and Release (hereinafter the
"Agreement") has been mutually agreed upon by the parties.
3. Subject to the performance by Employee of the terms and
provisions hereof, Employer will pay Employee, as severance
pay, twelve (12) months' salary at Employee's current annual
base pay of four hundred seventy-five thousand dollars
($475,000), together with the sum of two hundred thirteen
thousand dollars ($213,000) in lieu of a year-end bonus and
a lump sum payment of twelve thousand dollars ($12,000) for
application toward COBRA payments in the event Employee
elects to maintain medical insurance following his
resignation. Such base salary for the twelve (12) month
period shall be paid one-fourth on December 31, 1993, one-
fourth on March 31, 1994, one-fourth on June 30, 1994 and
one-fourth on September 30, 1994. The two hundred thirteen
thousand dollar ($213,000) payment in lieu of any bonus,
shall be paid one-half on December 31, 1993 and one-half on
March 31, 1994. The twelve thousand dollars ($12,000) lump
sum payment shall be made on December 31, 1993. All such
payments shall be subject to normal, lawful payroll
deductions.
4. In addition to the foregoing payments, Employee shall be
entitled to use Employer's apartment in New York from and
after the date hereof until such time as Employee shall move
his primary residence from Greenville, South Carolina, to
another location; the period of such use, however, shall not
extend beyond June 30, 1994. Employee will personally be
responsible for all expenses, including utilities, incurred
in the use of the apartment, which are not covered by the
actual rental.
5. Employer shall not be liable to reimburse Employee for
expenses of any type which are incurred on or after the date
hereof.

6. In consideration of the additional payments and benefits as
set forth above, which Employee acknowledges to be beyond
anything to which he is otherwise entitled, Employee agrees
that the payments and other considerations set forth herein
are in full settlement of all claims or rights he has or may
have arising from or in connection with his employment with
Employer or his separation from employment, and does hereby
release, remise and forever discharge Multimedia, Inc., its
agents, employees, representatives, attorneys, directors,
officers, stockholders, affiliated or subsidiary
corporations, predecessors, successors and assigns, and the
successors and assigns of any of the foregoing, from any and
all claims, complaints, or causes of action, known or
unknown, of any kind or type he may have or claim to have,
whether arising under federal, state, or local statute,
ordinance, common law, regulation, equity or other source
including, but not limited to, claims under the Employee
Retirement Income Security Act (ERISA), Title VII of the
Civil Rights Act of 1964, Section 1981 of Title 42 of the
U.S. Code, the Americans with Disabilities Act, and the
South Carolina Wage Payment Act (S.C. Code Ann. (section symbol)
41-10-10 et seq.) and claims asserting breach of contract, defama-
tion, invasion of privacy, harassment, outrage, or other
common law causes of action, or claims for workers' compen-
sation or other compensation for bodily injury. In other
words, Employee agrees he will not sue or otherwise complain
against Employer or anyone connected with Employer for
discrimination, failure to pay wages, breach of contract,
injury to reputation, or any other complaint or grievance
Employee may have. In addition, Employee waives any right
he may have to re-employment with Employer or any related
company and agrees not to apply for re-employment to Employ-
er.
7. In consideration of the payments hereunder, Employee shall
not institute any suit or action at law, in equity or
otherwise in any court of the United States or any state
thereof, or any proceeding or charge before any
administrative agency of either the United States or any
state thereof or before any public or private tribunal,
against Employer or any of the other entities released in
this Agreement, arising in any way from Employee's
employment by Employer or his termination of employment
therefrom.
8. Employee covenants and agrees to keep confidential the terms
of this Agreement and the terms of his separation from
Employer, and not to discuss or disclose the terms of this
Agreement or the terms of his separation from Employer with
or to anyone other than his attorney or members of his
immediate family. Employee shall instruct his attorney and
family members to keep any such information confidential and
warrants that they will do so. In addition, Employee agrees
to keep confidential, and not disclose to any person, any
and all confidential information learned by him or to which
he was exposed while employed by Employer. For purposes of
this Agreement, confidential information shall include all
information (whether in written form, on electronic media,
or oral) about Employer, its research, its financial
information, its operations, plans, marketing and business
strategy, and all other business information not readily
available, absent breach hereof, involving or related to the
businesses in which it is engaged, specifically including
but not limited to the newspaper, radio and television,
cablevision, entertainment and security alarm industries.
Employee shall promptly return to Employer any property of
Employer including, but not limited to, any confidential
information, which may be in his possession, custody or
control as of the date hereof.
Notwithstanding this preceding paragraph 8, however,
Employee and his attorney may disclose such information
regarding this Agreement or Employer as they are required to
disclose by way of a court order or directive of a state or
federal regulatory agency.
9. Employee further covenants and agrees not to criticize,
disparage or otherwise speak or write unfavorably either in
public or private, of or concerning Employer, its officers,
directors or employees or any of its businesses. Such
covenant and agreement specifically includes, but is not
limited to, any comments to the press, industry
publications, television or radio news or discussion
programs or personal conversations with other individuals.
10. In the event Employee shall violate any of his warranties,
covenants or agreements hereunder, Employee shall forfeit,
at the option of the Employer, any remaining payments due
Employee under the terms of this agreement, such forfeiture
to be in addition to injunctive relief and such other
remedies as Employer may be entitled to under the law or in
equity.
11. This Agreement shall be governed in all respects as to
validity, construction, performance, or otherwise by the
laws of the State of South Carolina and federal law as
applicable, without regard to choice of law
principles.

Executed and agreed on this 9th day of December, 1993.

THIS RELEASE ENDS ALL CLAIMS.
READ CAREFULLY BEFORE SIGNING.

WITNESS: MULTIMEDIA, INC.

(signature of David Freeman) (signature of Robert E. Hamby, Jr.)
_________________________ ______________________________
By: Its duly authorized officer

WITNESS:

(signature of David Freeman) (signature of J. William Grimes)
_________________________ ______________________________
J. William Grimes

Exhibit 11
MULTIMEDIA, INC.

Computation of Primary and Fully Diluted Earnings per Share

Twelve Months Ended
12/31/93 12/31/92 12/31/91
Primary

Net earnings applicable to
common and common equivalent
shares $99,850,000 60,504,000 48,397,000

Shares:
Weighted average number of
common and common equivalent
shares outstanding 38,374,000 37,593,000 37,253,000

Primary earnings per common
and common equivalent shares $ 2.60 1.61 1.30

Fully Diluted

Net earnings applicable to
common and common equivalent
shares $99,850,000 60,504,000 48,397,000

Shares:
Weighted average number of
common and common equivalent
shares assuming ending
market price 38,422,000 37,673,000 37,281,000

Fully diluted earnings
per share $ 2.60 1.61 1.30

Prior years' shares and per share amounts have been retroactively
adjusted to reflect the 3-for-1 stock split effected April 1991.

(Multimedia, Inc. logo appears here)
Multimedia, inc.
annual report
1993

Newspapers
Broadcasting
Entertainment
Cable Television
Security

<PAGE>

Multimedia's Mission is to build
shareholder value by effectively managing and growing current
businesses...
capitalizing on new investment opportunities... producing and
distributing the best news and entertainment programming... being
the preferred supplier for our advertising customers... and providing
a workplace where our employees' contributions are
fully recognized and rewarded.

<PAGE>

Contents
Financial Highlights 1
Operating Results, 2
Media Industry Glossary
Letter to Shareholders 3
Newspapers 6
Broadcasting 8
Entertainment 10
Cable 12
Security 14
Management's Discussion 16
Eleven-Year Review 18
Financial Statements 24
Notes to Consolidated 28
Financial Statements
Independent Auditors' 42
Report
Report of Management 43
Officers and Board of Directors 44
Multimedia, Inc. Divisions 45
Shareholder Information 46

Multimedia, Inc. is a diversified media company with corporate
headquarters in Greenville, South Carolina. Founded in 1968,
Multimedia, Inc. is comprised of five operating divisions. Multimedia
Newspaper Company publishes 11 daily and 49 non-daily
newspapers; Multimedia Broadcasting Company owns and operates
five network-affiliated television stations and five radio stations;
Multimedia Cablevision Company operates more than 125 cable
television franchises in Kansas, Oklahoma, Illinois, Indiana and North
Carolina; Multimedia Security Service monitors approximately 52,000
security alarm customers; and Multimedia Entertainment produces
and syndicates quality
television programming, including Donahue, Sally Jessy Raphael,
Jerry Springer, and Rush Limbaugh, The Television Show.

<PAGE>

Financial Highlights
(In thousands except per-share data)

1993 1992 1991

Earnings Per Share $ 2.60 1.61 1.30
Revenues 634,574 576,781 524,326
Operating Profit 184,403 173,105 155,806
Net Earnings 99,850 60,504 48,397
Total Assets 655,174 627,945 556,285
Long-Term Debt 664,997 745,995 757,125
Capital Expenditures 47,378 37,493 32,187
Depreciation 35,422 31,710 29,140
Shares Outstanding 37,210 36,803 35,065
Operating Profit Margin 29.1% 30.0% 29.7%

Stock Performance

1993 1992

QUARTER 1 High $36.25 28.00
Low 32.00 23.00
QUARTER 2 High $38.00 29.00
Low 32.00 26.00
QUARTER 3 High $36.75 28.75
Low 30.75 23.50
QUARTER 4 High $39.00 32.00
Low 33.50 24.00

Multimedia, Inc. stock is traded in the NASDAQ National Market System
under the symbol MMEDC. Listed above are the high and low bids by
quarter for 1993 and 1992. No dividends were declared or paid during
1993 or 1992.

(Operating Revenues bar graph appears here--see appendix)
(Net Earnings bar graph appears here--see appendix)
(Earnings Per Share bar graph appears here--see appendix)

*1993 earnings from ongoing operations excluding accounting
changes, income tax adjustments and the sale of a property were
$72,172 and $1.88 per share.

<PAGE>

Media Industry Glossary

Convergence: Refers to the blurring of boundaries between the
television, cable, telephone and computer industries as companies
and technologies join to provide increasingly sophisticated
communications methods and services.

Information Superhighway: A catch-all term, somewhat abstract at
this point, used to describe the technical platform
that will allow the eventual linkage of many different
communications (television / cable / phone / computer) systems.

Coaxial Cable: The first generation of wire used for cable television,
which uses a copper conductor to transport electrical impulses. Will
probably continue to be used for the wire leading directly into
homes, even in fiber optic cable systems.

Fiber Optic Cable: A state-of-the art cable, it carries more information
at much higher speeds, is more reliable and delivers a higher-quality
picture than coaxial cable can. Cable systems are being rebuilt using
fiber optic cable for everything but the wire leading into the home.

Digital Compression: Digital technology is replacing "analog"
technology for many applications. "Digitizing" information -- such as a
musical recording or a television signal -- means to translate electrical
impulses into a series of numbers like computers use, allowing
exponentially more information to fit into the same space or be
transmitted over a given wire. Digital compression further increases
the number of signals that can be carried over fiber optic cable by 10
times or more -- making possible a "500-channel universe."

500-Channel Universe: Made possible by the combination of high-
capacity fiber cable with digital compression technology, which
expands the capacity of most cable systems from the current average
of 35-50 channels to as many as 500.

Interactive: Refers to services that offer viewers two-way
communications, such as "video on demand," electronic advertising
databases that viewers can use as personal reference resources, and
more sophisticated forms of home shopping. Although some
interactive cable channels were being tested at the end of 1993, they
are not expected to gain wide exposure until 1995 -- when interactive
television-set converter boxes using industry standards still being
developed become readily available.

Video on Demand (VOD): Expected to be the most widely used
interactive cable service made possible by new technology. Will
enable people to order and watch movies, sports, news and other
programming on their own schedules, on a pay-per-view basis. Other
VOD services may include video game libraries containing hundreds
of titles, which viewers would be able to access for a flat fee per
month.

Multiplexing: Refers to multiple channels offered by a service such as
Home Box Office, giving viewers a wider selection of movie titles and
starting times. This service is already available, but is generally not
offered on systems that have not yet been rebuilt with the higher-
capacity fiber cable.

1992 Cable Act: The Cable Television Consumer Protection and
Competition Act of 1992 imposed federal regulation on many aspects
of the cable business, and set the parameters for regulation of other
aspects at the option of local cable franchising authorities. Among
other things, the Act set benchmarks for what cable companies can
charge for basic cable
service and certain other services, such as remote controls, multiple
converter boxes etc. The Act also established a procedure by which
broadcast television stations and cable operators negotiate formal
consent agreements providing for the transmission of the broadcast
signal over cable, i.e. "retransmission." A "Must Carry" provision in
the Act in essence gives most commercial broadcast stations the right
to require their signals to be carried by the local cable operator(s).

Headend/Node: A headend is the originating point in a cable system;
there may be several headends within a given system. Replacing
coaxial wire with fiber cable reduces the number of required
headends, which lowers operating and ongoing capital expense. Fiber
carries audio and video signals from the headends to "nodes," which
usually serve 500 to 2,000 homes.

MSOs: Refers to "Multiple (cable) System Operators" such as
Multimedia, who serve cable subscribers through many different

(Operating Profit bar chart appears here--see appendix)

systems, each of which is established through a local franchise
agreement. Multimedia serves 417,300 subscribers through more
than 125 franchises, making it the 30th largest MSO in the U.S.

DBS: Direct broadcast satellites are a new competitor of traditional
cable systems. The two DBS systems being launched in 1994 require
an 18-inch dish currently costing approximately $700 in each
subscriber household. While DBS has some advantages over cable
systems, the primary disadvantages are the upfront cost to
consumers and its inability to transmit local broadcast stations.

RBOCs, Telcos: Synonyms short for "Regional Bell Operating
Companies" and "Telephone Companies," respectively. They have
become major new players in the media industry by forming
alliances with movie studios, syndicators and large cable companies.

Syndication: Generally refers to the sale of programming to television
stations for use during non-primetime periods. Many programs, such
as Multimedia's talk shows, are produced originally for syndication.
In addition, the syndication market includes packages of reruns of
series originally produced for primetime network broadcast.

Barter: "Barter" is one way syndicators are compensated by
television stations for the

<PAGE>

Operating Results
(In thousands)

1993 1992 1991

Operating revenues:
Newspapers $135,920 132,485 128,954
Broadcasting 155,718 160,529 150,643
Cable 164,598 144,383 129,855
Entertainment 161,588 129,122 109,205
Security 16,750 10,262 5,669

$634,574 576,781 524,326

Operating profit:
Newspapers $ 37,667 37,698 34,554
Broadcasting 38,816 38,191 34,693
Cable 56,645 50,692 45,581
Entertainment 63,285 55,841 50,931
Security 1,838 1,818 1,056
Corporate (13,848) (11,135) (11,009)

$184,403 173,105 155,806

use of a given program. Under barter
agreements, the syndicator retains the right to sell a specified
number of commercials during each program, for which it keeps the
revenues. (The rest of the commercials are sold by the individual
stations to local or national advertisers.) Syndicated shows are often
sold under 100% barter arrangements until they become well-
established, at which time they may also earn revenues through
weekly license fees established by contract with the television
stations.

Rating/Share: A national rating point represents 1% of the American
television audience, or 942,000 households. A share refers to the
percentage of households using television (also call "HUT") at a given
time that watches a program. For example, a Nielsen score of 3/9
means that a program was watched by about 2.8 million (3 x
942,000) households, or 9% of the audience watching television
during that timeframe.

ROP/Preprints: Two different kinds of newspaper advertising. "ROP"
refers to ads that are printed on the pages of a newspaper and which
appear in all editions, i.e. "run of press." "Preprints" refer to the
advertising inserts found inside newspapers, but also sent by direct
mail to nonsubscribers. These can be targeted or "zoned" to certain
parts of a city according to demographics.

(Operating Revenues pie chart appears here--see appendix)
(Operating Profit pie chart appears here--see appendix)

<PAGE>

To Our Shareholders

Multimedia, Inc. completed its seventh consecutive year of earnings
increases in 1993, posting net income of $99.9 million on revenues
of $634.6 million. Earnings excluding two accounting changes,
income tax adjustments and a gain from the sale of a property
(more fully discussed in the Management's Discussion & Analysis)
were $72.2 million or $1.88 per share, compared to $60.5 million
or $1.61 per share in 1992.

We're very proud that Multimedia's earnings per share have
increased at a 21% compound annual growth rate over the last five
years -- one of the best track records in the media and cable
industries. That the Company was able to accomplish this during one
of the most prolonged economic downturns in recent history partly
reflects our diversification but more importantly is a tribute to our
employees' creativity, foresight and just plain hard work -- including
strict attention to cost management.

We're drawing on all of those strengths within Multimedia as we
continue to seek opportunities for our individual businesses and our
company as a whole in the increasingly exciting but also more
competitive media world.

What is the best role for the over-the-air broadcaster in a universe
that may one day include hundreds of cable channels? How do
newspapers ensure that they remain the primary information and
advertising resources in their communities? Where do mid-sized
cable companies belong in this era of mega-mergers between
regional telephone companies and large cable operators? How do you
capture and hold the interest of a viewing audience that has proliferating
choices at the touch of a remote control? How can you increase the value of
the services and counsel you offer your advertisers?

The profitable growth opportunities of the next decade will be found
in the answers to these tough questions, which we at Multimedia
have been addressing for some time. We hope that you'll read the
review of our operating divisions

(Photo of Walter E. Bartlett)
WALTER E. BARTLETT
Chairman of the Board, President
and Chief Executive Officer

(Photo of Donald D. Sbarra)
DONALD D. SBARRA
Senior Vice President - Operations

<PAGE>

beginning on page six, which
outlines many of the steps we have already undertaken. We are
committed to managing the Company for the highest long-term value
for our shareholders, and will keep you informed as we continue to
refine our strategies to fulfill that goal.

Multimedia began upgrading its cable systems with fiber optics in
1993, and will spend approximately $150 million to upgrade all of
our cable operations by the end of 1997. As we complete each
section of the upgrade, we will offer increasing numbers of our cable
customers up to 110 channels of cable programming, compared to a
current average of 40 channels in most of our systems. These will
include a wider selection of premium channels already available as
well as the new home shopping channels and video games that are
due to be launched.

Beginning in 1995, when interactive
converter boxes currently under development become available, we
will be ready to offer all of the proposed new interactive video
services -- on as many as 500 channels. This investment should
increase the value of our cable franchises and enable us to fully
participate in the additional revenue streams resulting from
potentially hundreds of new cable channels.

We also continue to look for acquisitions of subscribers in areas
where we already have significant market presence -- chiefly
Wichita, Kansas, and Oklahoma City. We recently announced a
pending transaction with another cable operator by which we will
extend our cable franchise to virtually every household
in the Wichita, Kansas, MSA (metropolitan
statistical area) through the addition of about 50,000 subscribers.

Like many communications companies, Multimedia has been actively
exploring new revenue-producing businesses with strategic partners
that have expertise complementary to our own. To date these include
a partnership with Hyperion Telecommunications, Inc., to develop a
competitive (long distance) access system in Wichita; a telephonic
advertising consortium being formed by BellSouth Enterprises, Inc.
and Cox Enterprises, Inc.; and the planned launch of a local news and
talk show cable channel by our Knoxville television station in
conjunction with the major cable operator in that area.

Looking back on 1993, I would have to describe it as one of good
business results, lots of planning for the future, and much change. In
December, following the departure of Bill Grimes, I reassumed my
former positions of president and chief executive officer. I'm very
pleased to be working closely with two men in whom I have the
utmost confidence. Don Sbarra, Senior Vice President -- Operations for
Multimedia, is managing the five divisions of the Company. Bob
Hamby, Senior Vice

(Photo of Walter Bartlett and Bob Hamby appears here)
Walter Bartlett (right) and Bob Hamby, Senior Vice President-Finance
and Administration, and Chief Financial Officer

<PAGE>

President -- Finance and Administration, and
Chief Financial Officer, is managing the administrative and financial
functions of Multimedia. We believe this team is well-equipped to
manage the Company as we set goals and chart strategic paths for
the converging media world.

Briefly, some of our accomplishments for 1993 include:

[] Repaying $80 million of debt;

[] Increasing revenues in every division but broadcasting, the results
of which were being compared against $13 million of political and
Olympics advertising revenues in 1992;

[] Increasing operating profit in four of our
five divisions;

[] Signing new contracts with Phil Donahue and Sally Jessy Raphael
that extend their talk show commitments until August 1995 and
August 1998, respectively;

[] Celebrating with Sally the 10th anniversary of her talk show;

[] Completing the sale of our video production company, and signing
agreements for the sale of three radio stations;

[] Opening two new security sales offices
(followed by another in January 1994);

[] Achieving profitability in the first full years of the Jerry Springer
and Rush Limbaugh television shows;

[] Adding 2 1/2 hours of newscasts per week at four of our television
stations;

[] Merging our two newspapers in Montgomery, Alabama; and

[] Upgrading the training and market research resources for all of our
advertising personnel, so that they may better serve their customers.

The improving economy should help produce operating profit
increases in 1994 for our newspaper and broadcasting divisions.
However, entertainment operating profit is not expected to increase
materially over the 1993 level due to investments in programming
and promotion we plan to make to protect the audience shares of
Donahue and Sally Jessy Raphael and to continue to develop our
newer shows. Also, because we are nearly doubling our capital
expenditures in 1994, mainly for the cable and security divisions, we
expect depreciation and amortization expense to increase about $9
million. Because of the ongoing effects of cable rate reregulation and
the additional depreciation, we expect the cable division's operating
profit to decrease slightly for 1994.

If there is any disadvantage in achieving superior earnings growth
for seven consecutive years, it's that people come to expect it. We
want you to know that the important investments we are making
will have a limiting effect on 1994 earnings growth, as outlined
above. We believe, however, that these strategic initiatives and
technological upgrades are in the best interest of creating greater
long-term value in the assets of Multimedia, Inc. Your company will
be prepared for both the challenges and the opportunities of the
future telecommunications world.[]

(Signature of Walter E. Bartlett)
WALTER E. BARTLETT
Chairman of the Board, President
and Chief Executive Officer

March 3, 1994

<PAGE>

Multimedia Newspaper Company

Multimedia improved the quality of its newspapers in 1993 while
continuing to develop and introduce niche publications and new
information delivery vehicles. These innovations will help maintain
competitiveness as the number of media choices for both readers and
advertisers continues to increase. The division's major daily
newspapers also intensified their efforts to capture advertising
dollars currently being spent in other media, such as Yellow Page
directories and direct mail.

Operating revenues for the division were $135.9 million, up 3% over
1992, and 1993 operating profit of $37.7 million was equal to the
prior year. Circulation revenue grew 6% to $30.2 million, based on
increases in rate and new cus-

(Photo appears here)
The use of shared research is an important element of Multimedia's
advertising sales program. Laura Biggerstaff, Marketing
Development Manager of The Greenville (S.C.) News-Piedmont Co.,
presents Bob Greiner (left), Executive Vice President, Belk Simpson Co.,
with a map showing potential customer growth areas. Rod Adams
(second from left), Consultative Sales Manager of The Montgomery
(Ala.) Advertiser, and Murray Howard, Research and Planning
Manager for Multimedia Newspaper Co., are also members of the
division's market research team.

(Photo appears here)
WireWatch, newsroom software developed by John Pittman (seated),
Executive Editor of The Greenville News-Greenville Piedmont, was
the division's foundation for electronic publications via facsimile and
videotext. Shown with Pittman are (clockwise from center)
newspaper division President Bern Mebane; Cecil Kelley, MNC
Director of Operations; and Hal Tanner, Business Manager, Greenville
News-Piedmont Co.

<PAGE>

tomers. Advertising revenues and
linage also increased, as strong gains in classified and preprint
categories more than offset weaker retail advertising.

Multimedia introduced new "audiotext" information services at The
Greenville (S.C.) News, the Asheville (N.C.) Citizen-Times and The
Montgomery (Ala.) Advertiser in 1993. The services offer readers
round-the-clock access via touchtone phone to data in hundreds of
categories, including stock quotes and local entertainment. The
newspapers are examining ways to make these services more user-
friendly, including competitive applications for three-digit ("N11")
telephone access numbers.

To further develop the "electronic bridge" between the papers' news
and advertising databases and the public, Multimedia has agreed to
become a charter member of a newspaper consortium in a joint
venture being formed by BellSouth Enterprises, Inc. and Cox
Enterprises, Inc. The network will market telephonic classified and
Yellow Page advertising throughout BellSouth's service area using
data from all of the newspapers in the consortium.

The Greenville, Asheville and Montgomery newspapers are working
together to obtain new advertisers and recapture advertising dollars
that have gone into other media with marketing presentations
targeted to meet the specific needs of regional accounts. In 1993
they secured not only the preprint business from one major food
retailer for their own papers, but also the printing and distribution of
the inserts to 43 other newspapers in the region. Multimedia also
helped establish a Southeastern region newspaper network that
enables clients to reach 13 states with one advertising buy.

During the year the Montgomery, Ala., newspapers successfully
merged the afternoon Journal with the morning Advertiser. In early
1994, the Advertiser began a two-year capital investment program
to build a production facility and purchase a new press, which will
greatly enhance the paper's quality and efficiency.

In January 1994, the news staffs of the News and Piedmont were
merged. The reorganization will enable the two papers to expand
their coverage of the Greenville/Spartanburg area, improve overall
editorial quality and
gradually result in economies of scale.

(Photo appears here)
Multimedia secured Winn-Dixie's preprint distribution business by
creating a printing program for over one million circulars per week
and developing a four-state distribution network of 44 newspapers.
In this photo, Winn-Dixie's Marketing Director John Harden (far right)
surveys weekly circulars with (left to right) Jay Banks, division Vice
President and Publisher of the Asheville Citizen-Times; Steve Brandt,
Publisher of the Greenville dailies; and Tom Stultz, division Vice
President.

Although Multimedia Newspapers' results for 1994 will depend
largely on the strength and stability of the U.S. economic recovery,
the division is well-positioned with strong advertiser acceptance and
good cost controls in each of its areas. In addition, Multimedia has
taken decisive actions to ensure the continued relevance of its
newspapers in a world that is becoming increasingly oriented toward
video and audio information sources.[]

<PAGE>

Multimedia Broadcasting Company

Multimedia Broadcasting continued to benefit in 1993 from its
commitment to highly rated local and syndicated television
programming and excellent service to advertisers, as well as a slowly
improving economy.

The year was particularly challenging, however, as the division's
results were being compared to 1992, which included over
$13 million in election-year and Olympics advertising revenues. In
addition, the division's mobile production operation, Multimedia
Video Productions, was sold in January 1993. Even though operating
revenues declined 3% to $155.7 million, the broadcasting division
increased operating profit 2% to $38.8 million.

Multimedia's broadcasting strategy in the increasingly competitive
media world is best described by the word "localism." This refers to
producing local news, information and entertainment programs of
the highest possible relevance to viewers.

Multimedia's television stations added a total of 10 hours of local
news to weekly schedules during 1993. The division's stations have

(Photo appears here)
News Anchor Tina Hicks (second from right) and News Director Dodie
Cantrell (right) of WMAZ-TV, Multimedia's CBS affiliate in Macon, Ga.,
shoot a public service announcement at Carver School, site of Project
Head Start, where WMAZ participates in the Adopt-A-School
program. Behind the camera are promotion department Producers
Latissa Jones (left) and Dawn Sharp.

(Photo appears here)
Pat Servodidio (left), President of Multimedia Broadcasting Company,
visits News Anchors Karen Foss and Rick Edlund on the set of KSDK-
TV's award-winning 10 p.m. newscast. KSDK had the nation's top-
rated newscast and recorded its biggest lead in five years in the St.
Louis market during the November 1993 sweeps period.

also taken advantage of new technologies to enhance news
programming. Recent investments include new sets at three stations
as well as upgrading of weather reporting through the addition of
Doppler radar and computerized graphics and animation.
In advertising, the division's localized focus involves a consultative
approach in which clients benefit from more targeted
market information and better-trained sales representatives who
bring true value to the advertisers' media-buying process. The
division's stations are also aggressively targeting nontraditional
television advertisers. Special programs for these customers include
innovations such as coupon books that are distributed by mail and
promoted on television.

<PAGE>

The properties' 1993 results varied with economic and competitive
conditions within each market. Advertising revenues at the four
NBC-affiliated stations also continued to be affected by the network's
#3 ranking in primetime programming.

WKYC-TV (NBC) in Cleveland posted a strong ratings increase for its
late-night news, and added weekend newscasts that outperform the
competition. Revenues and operating profit have increased
significantly in the three years since Multimedia acquired control of
the station.

KSDK-TV (NBC) in St. Louis was the top-rated station overall in the
nation's top 30 metered markets and had the country's highest-rated
late-night newscast, according to Nielsen reports for November 1993.
The station widened its lead over news competitors and increased
national and local advertising sales during 1993.

WBIR-TV (NBC) continued to dominate the Knoxville market for both
evening newscasts, and posted gains in revenues and operating profit
during the year. Its 6:00 p.m. newscast was ranked first in the
country's top 75 markets in the November 1993 Nielsen report.
WBIR-TV also signed an agreement to develop a local news and talk
cable channel in conjunction with the primary cable operator in
Knoxville.

WLWT-TV (NBC) signed a new contract to televise the Cincinnati
Reds' games during 1994-95, continuing a 43-year tradition as the
flagship station of the Cincinnati Reds Television Network.

WMAZ-TV (CBS), the only VHF station in Macon, benefited from a
stronger economic climate in that area, and maintained its dominance
in news and syndicated programming.

Multimedia will continue the aggressive positioning of its television
stations as leading information and entertainment sources in each of
its markets.[]

(Photo appears here)
Multimedia's commitment to localism is exemplified in WBIR-TV's
award-winning Heartland Series, a collection of vignettes on the
culture and people of the Appalachian region. Pictured on a
Heartland Series location in Knoxville are (left to right) series host
Bill Landry; Linda Billman, Managing Producer; Jim Hart, WBIR's
Vice President and General Manager; Steve Dean, Creative Services
Director; Bill Archer, Recordist; and Doug Mills, Videographer.

<PAGE>

Multimedia Entertainment Company

(Photo appears here)
Entertainment division President Bob Turner (left) and Executive
Vice President Dick Coveny are shown in front of Multimedia's
exhibit at the annual National Association of Television Programming
Executives (NATPE) convention, the largest marketplace for buyers
and sellers of syndicated television programming.

Multimedia's track record for developing and syndicating top-rated
talk shows gives it a strong leadership position in a television
programming niche that has grown dramatically in both audience
share and competition.

Multimedia's Donahue and Sally Jessy Raphael shows remained
among the highest-rated daytime talk shows, despite an increase
from four to 13 competing programs in the last four years. In
addition, Jerry Springer, in its
second season in national syndication, is the fastest-growing daytime
talk show according to Nielsen reports. Rush Limbaugh, The Tele-
vision Show, also in its second season, posted a 20% gain in audience
and increased its lead as the top syndicated late-night show.

The continued success of Multimedia's talk shows resulted in $63.3
million in 1993 operating profit, an increase of 13% over the prior
year. Operating revenues increased 25% to $161.6 million, largely
due to revenues from Rush Limbaugh and Jerry Springer for the
first full year.

Donahue had a national rating of 5.5 in 1993, its 26th year. The
program is seen in 189 U.S. markets, representing 97% of the
country, and in about 50 foreign countries. In 1993 Phil Donahue
signed a new contract to continue to host the show through August
1995.

Sally Jessy Raphael celebrated its 10th anniversary in 1993, and
achieved a 5.0 national rating for the year. The show is seen in 186
U.S. markets, covering 97% of the country, and approximately 30
foreign countries. Ms. Raphael also signed a new contract in 1993,
extending her commitment to host the program through August
1998.

Rush Limbaugh, the Company's first entry into late-night talk shows,
is shown in 223 markets, covering virtually the entire U.S. The show
had a 3.6 rating for the 1993 fall
season, only .7 of a point behind NBC's
"The Tonight Show."

Jerry Springer increased its number of markets to 145 for the 1993-
1994 season and is now available in 87% of the country. The show
continues to post steady audience gains, and Multimedia is
committed to developing it into

<PAGE>

one of the leading talk shows.

During 1993 Multimedia began to market a new talk show, scheduled
to debut in September 1994. Susan Powter will be hosted by the
well-known fitness advocate, whose book, "Stop the Insanity,"
reached the top of the New York Times best-seller list. The division
believes a motivational format led by one of the more intriguing
media personalities will quickly stand out from the din of new talk
shows.

Multimedia recently completed extensive research on talk show
audience viewing habits, which have changed dramatically over the
past few years. It is using that information not only to protect the
audience shares of Donahue and Sally Jessy Raphael, but also to fine-
tune the development of its new shows. The research also confirmed
for Multimedia the viability of a news-oriented all-talk channel for
cable, which it expects to introduce in the fall of 1994.

Multimedia began to leverage its preeminence as a talk show creator
more aggressively during the year with the development of co-
production arrangements in seven foreign countries. The division
intends to co-produce pilots and serve as a series advisor in these
international ventures.

Multimedia produced 16 hours of made-for-television movies and
miniseries
during 1993. It expects to curtail that activity in the future, however,
in order to concentrate its resources on more profitable programming
opportunities.[]

(Four photos appear here--see appendix)
Multimedia's four talk show hosts: (clockwise from upper left) Phil
Donahue, Sally Jessy Raphael, Rush Limbaugh and Jerry Springer.
Multimedia's expertise in developing and syndicating successful talk
shows has placed the Company in the forefront of a rapidly
expanding programming niche.

<PAGE>

Multimedia Cablevision Company

In 1993 Multimedia Cablevision posted its 14th consecutive year of
revenue and operating profit increases and planned a five-year $150
million capital investment program. These milestones were achieved
while the division also completed retransmission agreements with
broadcast television stations in its cable markets and dealt with new
rate regulations and other issues posed by the Cable Television
Consumer Protection and Competition Act of 1992.

Operating revenues were $164.6 million, a 14% increase over 1992,
and operating profit increased 12% to $56.6 million. Revenues and
operating profit would have increased 7% and 11%, respectively,
excluding the effect of an acquisition made in December 1992.

At year-end the division served 417,300 subscribers through 125
franchises, making it the 30th largest cable company in the U.S.

Multimedia Cablevision's strong profit margin and advertising
revenue growth have in large part resulted from its clustering policy,
which focuses on four areas -- in Kansas, Oklahoma, North Carolina
and suburban Chicago. This strategy greatly enhances operating and
advertising economies of scale, and the

(Photo appears here)
Customer service representatives Stacy Hernandez (right) and Debbie
Spillman assist customers in Cablevision's Wichita office. Multimedia's
reputation for providing excellent service has positioned the Company
as a leader in its field.

(Photo appears here)
Multimedia Cablevision's regional Vice Presidents discuss the
division's rebuilding of its systems with fiber optics. Ron Marnell,
Kansas, (second from right) outlines the Wichita rebuild for (left to
right) Cliff Waggoner, Illinois; Terry Gorsuch, Oklahoma; and Bruce
Mears, North Carolina.

<PAGE>

division will continue to seek
franchise acquisitions in those areas.

Multimedia increased the number of subscribers within its existing
systems by 1.8% during 1993. This internal growth rate was
somewhat lower than the division's recent average of about 3-4%,
partly because subscriber growth has slowed for the cable industry
in general and also because of economic softness in Wichita, Kansas,
its largest system.

During 1993 Multimedia rebuilt systems serving 15% of its
customers with fiber optics. Over the next four years, the division
will rebuild the rest of its systems and integrate digital compression,
which will prepare it for new competitors and open up many
revenue opportunities.

New competitors could include direct broadcast satellite and wireless
cable operators, but the regional telephone companies present the
most likely challenge due to their name recognition, financial
resources, and network switching and mass billing expertise. Despite
the increase in competitors, Multimedia expects to continue to offer
its markets a superior combination of service, price, programming
and technology, largely due to the rebuild plan.

The division believes its subscriber relations are already among the
best in its industry, and it constantly works to improve its customer
service. The rebuild program will enhance both picture quality and
reliability to a level equal to or better than other new technologies.

Potential new revenue sources will also become available through
the increased channel capacity of fiber versus traditional coaxial
cable, together with digital compression technology.

Immediate opportunities include new premium cable networks and
multiple versions of existing networks that offer more flexibility to
subscribers. "Video on demand," which will allow viewers to order
movies, sporting events, news programs and hundreds of video
games at will, is also expected to be one of the most significant new
revenue sources. Additional future services could include electronic
Yellow Page directories and classified advertising as well as
interactive video home shopping.

Multimedia Cablevision continues to increase revenue from currently
available ancillary sources. Cable programming attracts
a much larger proportion of viewers than it does advertising
revenue, and the division

(Photo appears here)
Cablevision's North Carolina region utilizes college and professional
athletes as spokespeople in a unique outreach program called
Supersports. Here, former NBA star Phil Ford, now assistant coach at
the University of North Carolina, delivers a motivational talk to a
group of young people.

has improved its sales efforts in order to
build market share. Multimedia has also signed a partnership agreement
with Hyperion Telecommunications, Inc., to offer access for long
distance signals to commercial customers in Wichita. The Company
believes it can profitably compete with the regional telephone
company for these customers because of its superior fiber optic
system with highly reliable backup systems and existing access to
the necessary right-of-ways.[]

<PAGE>

Multimedia Security Service

During 1993 Multimedia Security Service continued to develop the
management and sales infrastructure necessary for rapid subscriber
growth in an industry that offers much opportunity. After being
included in Multimedia Cablevision's results for its first
11 years of operation, Multimedia Security is reporting its results
separately for the first time in 1993, although the two divisions still
operate under common management.

Operating revenues for 1993 were $16.8 million, up 63% over 1992,
and operating profit increased 1% to $1.8 million. At year-end,
Multimedia served more than 52,400 customers, an increase of 48%
over the prior year.

(Photo appears here)
Mark Wilson (left), Security's Vice President of Operations, meets
with Shift Supervisor A. J. Jones (center) and Central Station Manager
Phil Davis in the division's nerve center, where both residential and
commercial security systems throughout the country are monitored.

(Photo appears here)
Security's rapid growth is being coordinated by veterans of the
same management team who were actively involved in the cable
division's expansion in the last decade. Shown on the construction
site of the new Security headquarters in Wichita are (left to right)
Vice President and Controller Patsy Selby; division President Mike
Burrus; Senior Vice President Tom Smith; and Vice President and
General Counsel David Fleming.

<PAGE>

The first security offices were opened in Wichita and Oklahoma City,
where Multimedia was already well-known for excellent service to
its cable customers. The division has expanded into other areas,
however, opening full-service offices in Dallas and Miami in late
1992, in Houston and Chicago during 1993, and in St. Louis in
January 1994. An eighth sales office will be opened later in 1994.
Offices that primarily provide maintenance and repair service
to existing accounts have also been opened recently in Los Angeles,
Phoenix and Las Vegas.

In addition to selling systems from its own sales offices, Security also
grows through the acquisition of accounts from other alarm
companies. In 1993, two-thirds of its new customers were generated
from these acquisitions.

Multimedia Security began a telemarketing operation in 1993, which
is intended to augment in-person sales presentations. Security has
also increased its advertising in Wichita, Okla- homa City and the
Chicago area.

To facilitate the continued rapid growth that it expects in the
security business, the
division is moving its central monitoring station, customer service
and administrative offices from their existing site at Multimedia's
cable headquarters in Wichita to its own nearby
location. Ground was broken on the new
monitoring facility in late 1993, and it will be completed by the end
of summer 1994.

The factors that make the security
business attractive for Multimedia -- growing concern about crime,
the relatively few households that already have alarms, and
technological advances that are reducing the cost of equipment -- will
inevitably attract more competitors in the future. However,
Multimedia has a distinct advantage in that it has been developing
its expertise and reputation in this area for over a decade, and it is a
large, well-capitalized security company operating among hundreds
of smaller, less well-established companies.

(Photo appears here)
Security Regional Managers Joel Johnson (right), Miami,
and Randy Rosiere, Wichita, review promotional and sales materials.
The Miami office, which opened in January 1993, has quickly become
one of the division's most productive operations, and the flagship
office in Wichita continues as one of Multimedia Security's top
producers.[]

<PAGE>
Multimedia, Inc. and Subsidiaries
Management's Discussion
and Analysis of Financial Condition
and Results of Operations

(Photo of Bob Hamby)
Bob Hamby, Multimedia's Senior Vice President -- Finance and Administration, and
Chief Financial Officer
Results of Operations
The Company had net earnings for 1993 of $99.9 million compared with $60.5
million for 1992. Net earnings per share for 1993 were $2.60 compared with $1.61
for 1992. The 1993 net earnings reflect a net benefit of $14.3 million resulting
from the cumulative effect of the adoption of Statements of Financial Accounting
Standards (SFAS) No. 109, Accounting for Income Taxes, and No. 106, Employers'
Accounting for Postretirement Benefits Other Than Pensions. In addition, net
earnings in 1993 also reflect a reduction in income tax expense of approximately
$12.0 million due to the resolution of the IRS examination of the Company's 1982
through 1986 consolidated federal income tax returns and the changes in tax
rates and amortization of intangible assets resulting from the Budget
Reconciliation Act of 1993. The earnings also included an after-tax gain of
approximately $1.4 million resulting from the sale of the Company's mobile video
production unit in January 1993. Earnings and earnings per share for 1993,
excluding the accounting changes, income tax adjustments and the gain on the
sale of the Company's mobile video production unit, were $72.2 million and
$1.88, respectively.
Operating Revenues
The following table shows the percentage increases (decreases) in the
Company's revenues for the years 1993 and 1992.
<TABLE>
<CAPTION>
Division 1993 vs. 1992 1992 vs. 1991
<S> <C> <C>
Newspapers 3% 3%
Broadcasting (3%) 7%
Cable 14% 11%
Entertainment 25% 18%
Security 63% 81%
Total operating
revenues 10% 10%
</TABLE>
NEWSPAPERS
The increase in newspaper revenues for 1993 resulted from increases in
circulation revenues, classified advertising and increases in other revenues.
The increase in newspaper revenues for 1992 resulted from increases in
circulation revenues and increases in other revenues. Advertising revenues
increased 1% for 1993 and remained flat in 1992. Advertising revenues represent
approximately 75% of total newspaper operating revenues. Linage increased 2% in
1993 and
16

<PAGE>
Multimedia, Inc. and Subsidiaries
Management's Discussion and Analysis

decreased 1% in 1992. The 1993 annual average net paid circulation increased 2%
for daily papers to 330,000; 1% for Sunday papers to 359,000; and 19% for
non-daily publications to 201,000. At December 31, 1993, daily circulation was
323,000, a slight decrease from the prior year; Sunday circulation was 352,000,
flat with last year; and non-daily publications' circulation was 202,000, an
increase of 28%. The 1992 annual average net paid circulation increased 1% for
daily papers to 325,000; 2% for Sunday papers to 356,000; and 14% for non-daily
publications to 169,000. At December 31, 1992, daily circulation was 325,000, a
2% increase from the prior year; Sunday circulation was 351,000, an
increase of 2%; and non-daily publications' circulation was 159,000,
flat with 1991. The Company's three largest newspaper operations, which
are in Greenville, South Carolina; Asheville, North
Carolina; and Montgomery, Alabama, account for
approximately 75% of the division's revenues.
BROADCASTING
Broadcasting revenues decreased 3% in 1993. Local and national revenues
increased approximately $6.3 million in 1993, and political revenues were
approximately $8.0 million less than in 1992. The 1993 revenues decreased by
approximately $3.4 million as a result of the sale of the Company's mobile video
production unit. Broadcasting revenues increased 7% in 1992 principally as a
result of political revenues, which were approximately $8.4 million greater than
in 1991. Television operating revenues represent over 90% of the total
broadcasting revenues. Local time sales account for approximately 50% and
national time sales
account for approximately 33% of the total television operating revenues. The
remainder of television operating revenues is accounted for by political,
network and other revenues.
CABLE
Cable revenues increased 14% in 1993, with approximately half of the
increase due to the acquisition of cable systems in Indiana. Excluding the
revenues from the Indiana cable systems, cable revenues would have increased 7%
in 1993. Of this 7% increase in cable revenues from 1992 to 1993 and the 11%
increase from 1991 to 1992, approximately 4% and 3%, respectively, were due to
rate increases to the cable subscriber. Subscriber growth contributed increases
of 1% and 4%, respectively. Other cable acquisitions and growth of ancillary
revenues accounted for 2% and 4%, respectively.
The average monthly revenue per cable subscriber at the end of 1993 was
$33.29 versus $32.13 in 1992 and $30.36 in 1991. Multimedia Cablevision
increased its basic cable subscriber counts to 417,000 in 1993 from 410,000 in
1992 and 365,000 in 1991.
In February 1992, the Company purchased approximately 5,000 cable
subscribers in Illinois from Dowden Communications Investors, L.P., and in
December 1992, the Company purchased approximately 28,000 subscribers in Indiana
from Prime Cable Income Partners, L.P.
ENTERTAINMENT
Entertainment revenues increased 25% in 1993 primarily due to increases in
revenues from the SALLY
17

<PAGE>
Multimedia, Inc. and Subsidiaries
Management's Discussion and Analysis

JESSY RAPHAEL show and the first full year of revenues for the division's new
talk television shows JERRY SPRINGER and RUSH LIMBAUGH, THE TELEVISION SHOW.
Revenues for the division's made-for-television movie production business,
Multimedia Motion Pictures (MMP), reflect the increase in movie production from
six hours in 1992 to 16 hours in 1993.
The majority of the 1992 increase in entertainment revenues was
attributable to increases in revenues from the DONAHUE and SALLY JESSY RAPHAEL
shows. A portion of the 1992 increase in revenues was also derived from MMP and
the introduction of new shows, including JERRY SPRINGER and RUSH LIMBAUGH, THE
TELEVISION SHOW.
Excluding the impact of MMP's productions and new shows in 1993 and 1992,
the revenue increase would have been 5% and 11%, respectively.
The DONAHUE and SALLY JESSY RAPHAEL shows account for virtually all of the
division's profit and represent approximately 50% and 25%, respectively, of the
entertainment division's revenues.
In 1993, Phil Donahue signed a new contract with
Eleven-Year Review
(IN THOUSANDS EXCEPT PER-SHARE DATA)
<TABLE>
<CAPTION>
Year Ended December 31, 1993 1992 1991
<S> <C> <C> <C>
Operating revenues $634,574 576,781 524,326
Operating expenses..................................................................... 399,971 360,694 330,072
Depreciation and amortization 50,200 42,982 38,448
Total operating costs and expenses 450,171 403,676 368,520
Operating profit....................................................................... 184,403 173,105 155,806
Interest expense....................................................................... 61,996 71,820 79,315
Other income (expense), net 1,494 (447) 643
Earnings before income taxes, minority interest
and other items(1)............................................................... 123,901 100,838 77,134
Income taxes........................................................................... 38,703 41,343 30,254
Minority interest in subsidiaries' losses, net 320 1,009 1,517
Earnings (loss) before other items.................................................. 85,518 60,504 48,397
Other items 14,332 -- --
Net earnings (loss) $ 99,850 60,504 48,397
Earnings (loss) per share before other items........................................... $ 2.23 1.61 1.30
Earnings (loss) per share.............................................................. $ 2.60 1.61 1.30
Cash dividends per share............................................................... $ -- -- --
Average common shares outstanding(2)................................................... 38,374 37,593 37,253
Long-term debt, including current installments......................................... $664,997 745,995 757,125
Total assets $655,174 627,945 556,285
</TABLE>
1. OTHER ITEMS CONSIST OF THE CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING
PRINCIPLES IN 1993, AND AN EXTRAORDINARY ITEM IN 1990.
2. INCLUDES DILUTIVE COMMON STOCK EQUIVALENTS IN 1987 THROUGH 1993.
SHARE AND PER-SHARE AMOUNTS HAVE BEEN RETROACTIVELY ADJUSTED TO REFLECT THE
3-FOR-1 STOCK SPLIT EFFECTED APRIL 1991.
18

<PAGE>
Multimedia, Inc. and Subsidiaries
Management's Discussion and Analysis

the Company to continue to host the DONAHUE show through August 1995. Sally
Jessy Raphael also signed a new contract in 1993 to continue to host the SALLY
JESSY RAPHAEL show through August 1998.
SECURITY
Security revenues increased 63% in 1993 and 81% in 1992 primarily due to
the increase in the number of security subscribers. The number of security
subscribers at year-end increased to 52,400 in 1993 from 35,300 in 1992 and
25,500 in 1991. Of the
increase in the number of subscribers in 1993, 60% was due to acquisitions, and
40% was due to internally generated sales. Monitoring fees from security
customers represent approximately 80% of the division's revenues. Installation
and maintenance fees account for the remainder of the division's operating
revenues.
<TABLE>
<CAPTION>
1990 1989 1988 1987 1986 1985 1984 1983
<S> <C> <C> <C> <C> <C> <C> <C>
480,724 462,698 439,588 410,753 371,799 336,271 304,361 269,720
279,787 269,536 263,671 251,434 232,142 221,377 202,014 181,266
30,655 29,492 28,572 27,744 25,487 24,275 21,523 18,411
310,442 299,028 292,243 279,178 257,629 245,652 223,537 199,677
170,282 163,670 147,345 131,575 114,170 90,619 80,824 70,043
88,289 102,109 108,340 110,999 111,890 36,378 8,289 8,198
(873) (56) 3,522 6,573 159 (6,323) (8,368) 3,413
81,120 61,505 42,527 27,149 2,439 47,918 64,167 65,258
32,462 22,845 15,650 14,660 7,100 26,280 30,479 30,084
-- -- -- -- -- -- -- --
48,658 38,660 26,877 12,489 (4,661) 21,638 33,688 35,174
(3,078) -- -- -- -- -- -- --
45,580 38,660 26,877 12,489 (4,661) 21,638 33,688 35,174
1.32 1.04 .73 .34 (.14) .47 .67 .72
1.23 1.04 .73 .34 (.14) .47 .67 .72
-- -- -- -- -- .16 .20 .17
36,984 37,263 36,579 36,450 33,000 46,350 49,995 49,161
798,877 747,776 793,569 841,379 882,108 880,541 80,831 86,818
535,535 404,142 405,000 409,279 408,765 399,037 402,820 387,112
</TABLE>
19

<PAGE>
Multimedia, Inc. and Subsidiaries
Management's Discussion and Analysis

Operating Costs
and Expenses
Operating costs and expenses are comprised of production costs, selling,
general and administrative expenses, and depreciation and amortization expenses.
The following table shows the percentage increases (decreases) in the Company's
operating costs and expenses for the years 1993 and 1992.
<TABLE>
<CAPTION>
Division 1993 vs. 1992 1992 vs. 1991
<S> <C> <C>
Newspapers 4% --
Broadcasting (4%) 6%
Cable 15% 11%
Entertainment 34% 26%
Security 77% 83%
Total operating
costs 12% 10%
</TABLE>
NEWSPAPERS
The majority of the operating costs and expenses increase in 1993 was due
to increases in newsprint and production costs. Operating costs and expenses
remained flat in 1992 principally due to a decrease in newsprint costs.
Newsprint represents approximately 20% of the total newspaper division's
operating costs and expenses.
BROADCASTING
The 1993 decrease in broadcasting operating costs and expenses was
principally due to decreases in programming costs and a reduction of
approximately $2.4 million in costs due to the sale of the Company's mobile
video production unit. The 1992 increase in broadcasting operating costs and
expenses was principally due to increases in programming costs, sales-related
costs and programming write-offs of approximately $2.5 million.
CABLE
The 1993 costs and expenses include the results of the Indiana cable
systems purchased in December 1992. Excluding the results of the Indiana cable
systems, operating costs and expenses would have increased approximately 6% in
1993.
This 6% operating costs and expenses increase in 1993 and the 1992 increase
were principally due to programming cost increases and the expansion of the
division's wireless cable operation.
ENTERTAINMENT
The 1993 increase is primarily attributable to the costs related to the
increase in the number of hours of programming in MMP and increases in costs
associated with the first full year of the production of JERRY SPRINGER and RUSH
LIMBAUGH, THE TELEVISION SHOW. The number of hours of programming produced and
sold by MMP increased from six hours in 1992 to 16 hours in 1993. The 1992
expenses include expenses related to MMP and new talk shows. Excluding the
effect of the costs mentioned above, operating costs increases for 1993 and 1992
would have been approximately 6% and 13%, respectively.
SECURITY
The security operating costs and expenses increases in 1993 and 1992 were
principally due to the expansion of the Company's security alarm business. The
majority of the costs and expenses increases in 1993 and 1992 was due to the
opening of new full-service offices, increases in central station monitoring
costs, and depreciation and amortization expense related to the subscriber
growth. The division opened one new full-service office in the fourth quarter of
1991, two offices in the fourth quarter of 1992 and
20

<PAGE>
Multimedia, Inc. and Subsidiaries
Management's Discussion and Analysis

two additional offices during the first quarter of 1993. The start-up costs
associated with the increase in sales offices and the increase in depreciation
and amortization offset the related revenue increases.
Operating Profit
The above changes in operating revenues and operating costs and expenses
resulted in the following increases in the Company's operating profits for the
years 1993 and 1992.
<TABLE>
<CAPTION>
Division 1993 vs. 1992 1992 vs. 1991
<S> <C> <C>
Newspapers -- 9%
Broadcasting 2% 10%
Cable 12% 11%
Entertainment 13% 10%
Security 1% 72%
Total operating
profit 7% 11%
</TABLE>
Interest Expense
Interest expense was $62 million in 1993, $72 million in 1992 and $79
million in 1991. The decrease in expense was principally due to debt payments
and reduction in interest rates related to the Company's floating rate debt.
At December 31, 1993, the Company's debt financing included a $581 million
unsecured bank facility and $400 million of unsecured Senior Notes. The
borrowings under the bank facility bear a floating interest rate over applicable
prime, CD or LIBOR rates based on the Company's debt to annualized operating
cash flow ratio. The Company has interest rate swap agreements which effectively
fix LIBOR on $100 million of its floating rate debt at approximately 5.4%. The
interest rate swap agreements expire at various times from October 1994 through
November 1996. The Company has interest rate cap agreements which cap LIBOR at
7% on $50 million that expire in 1994 and 1995, and an interest rate cap
agreement which caps LIBOR at 7% on $25 million which begins in 1996 and expires
in 1997. The bank Credit Agreement required the Company to maintain interest
rate protection agreements until December 31, 1993, of not less than 40% of the
outstanding balance under the bank credit facility. The Senior Notes bear
interest at a composite rate of 10.7%.
The Company's Board of Directors approved interest rate guidelines in
October 1990 to maintain interest rate protection on a minimum of 70% of
outstanding debt.
In addition to purchasing a 51% equity interest in WKYC from NBC, the
Company purchased a 51% interest in a $75 million principal promissory note of
WKYC which was held by NBC. As a result, 51% of the note is now due to the
Company, and NBC retained a 49% interest in the note ($36.8 million), which
bears interest at a rate of 10% and is due in full on December 26, 1997.
The composite interest rate on all debt was 9.2%, 8.6% and 9.8% at the end
of 1993, 1992 and 1991, respectively.
Income Taxes
The effective income tax rates were 32%, 41% and 39% for 1993, 1992 and
1991, respectively. The resolution of the Internal Revenue Service (IRS)
examination of the Company's 1982 through 1986 consolidated federal income tax
returns and changes in tax
21

<PAGE>
Multimedia, Inc. and Subsidiaries
Management's Discussion and Analysis

rates and amortization of intangible assets from the Budget Reconciliation Act
of 1993 occurred in the third quarter of 1993. The cumulative effect of the
above mentioned items was a decrease in tax expense of approximately $12
million. The Company expects the 1994 tax rate to be between 41% and 42%.
The Company is contesting certain proposed deficiencies for 1987 through
1989. The deficiencies principally involve various acquisition issues related
primarily to cable. The ultimate resolution of these matters cannot be
ascertained at this time. The Company is continuing to vigorously contest the
assessments. The Company believes that it has adequately provided for
agreed-upon and potential deficiencies, including interest. This is discussed
further on page 35.
Effective January 1, 1993, the Company adopted SFAS No. 109, Accounting for
Income Taxes, and reported a gain of approximately $15.4 million as the
cumulative effect of the change in the method of accounting for income taxes.
SFAS No. 109 requires a change from the deferred method under Accounting
Principles Board (APB) Opinion 11 to the asset and liability method of
accounting for income taxes. Under the asset and liability method of SFAS No.
109, deferred income taxes are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases.
Prior years' financial statements have not been restated to apply the
provisions of SFAS No. 109.
Postretirement Benefits
Effective January 1, 1993, the Company adopted SFAS No. 106, Employers'
Accounting for Postretirement Benefits Other Than Pensions, and reported an
expense of approximately $1.1 million, net of tax, as the cumulative effect of
the change in the method of accounting for postretirement benefits. The new
rules require employers to accrue for the costs of providing health and other
welfare benefits to future retirees. The cost of postretirement medical benefits
has historically been accounted for on the cash basis. Prior years' financial
statements have not been restated.
Minority Interest
Minority interest represents the minority shareholders' proportionate share
of the income or loss of certain consolidated subsidiaries, primarily WKYC-TV,
Inc.
Inflation
Historically, the Company has competitively priced its products and
services to more than offset price increases to the Company by vendors and
others. The Company was able to implement price increases for many of its
products and services in 1993, 1992 and 1991, during periods of low inflation.
The Company anticipates this trend of price increases to be sustained through
1994, except for any prices subject to governmental regulation.
22

<PAGE>
Multimedia, Inc. and Subsidiaries
Management's Discussion and Analysis

Liquidity and Capital
Resources
The Company defines liquidity in terms of its ability to fund its current
operations, make capital expenditures and service its debt. Internally generated
funds and the bank Credit Agreement are the Company's primary sources of
liquidity. The primary uses of funds have been for capital expenditures, taxes,
acquisitions, debt repayments and film contract payments.
The bank Credit Agreement and/or Senior Notes contain covenants which limit
(i) payment of dividends; (ii) purchase of capital stock of the Company; (iii)
incurrence of indebtedness; (iv) acquisitions outside the Company's current
lines of business; (v) liens; (vi) investments; (vii) transactions with
affiliates; (viii) sales of assets; and (ix) certain extraordinary transactions.
In addition, one or both of the agreements require the Company to maintain
specific ratios of debt to annualized operating cash flow, annualized operating
cash flow to interest expense and annualized operating cash flow to fixed
charges. Management believes it is in compliance with all covenants.
Principal payment schedules for the Credit Agreement and Senior Notes are
provided on pages 31 through 33. The Company estimates its cash interest expense
requirements for 1994 to be approximately $61 million, capital expenditure
requirements to be approximately $90 million and the required principal payments
to be approximately $1 million. At December 31, 1993, the Company had
approximately $270 million available under the bank Credit Agreement.
The bank facility and Senior Notes provide, among other things, additional
available funds for future acqui-
sitions and repurchase of the Company's stock within certain limitations. At
December 31, 1993, the Company had signed letters of intent to purchase security
systems for up to $1 million. During the first quarter of 1994, the Company sold
its radio stations in Milwaukee, Wisconsin, and Shreveport, Louisiana, for a
total of $7.2 million, which resulted in a gain of approximately $3.6 million
before taxes.

(Photo appears here)
Pictured outside Multimedia's Greenville, S.C., headquarters are (left to right)
Clyde Baucom, Vice President -- Personnel and Benefits; Claudia Price, Vice
President -- Taxes; Tom Magaha, Vice President -- Finance and Development, and
Controller; and Alan Austin, Treasurer.
23
<PAGE>
Multimedia, Inc. and Subsidiaries
Consolidated Statements of Earnings
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(IN THOUSANDS EXCEPT PER-SHARE DATA)
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Operating revenues:
Newspapers............................................................................. $135,920 132,485 128,954
Broadcasting........................................................................... 155,718 160,529 150,643
Cable.................................................................................. 164,598 144,383 129,855
Entertainment.......................................................................... 161,588 129,122 109,205
Security 16,750 10,262 5,669
Total operating revenues 634,574 576,781 524,326
Operating costs and expenses:
Production............................................................................. 229,385 202,865 185,031
Selling, general and administrative.................................................... 170,586 157,829 145,041
Depreciation and amortization 50,200 42,982 38,448
Total operating costs and expenses 450,171 403,676 368,520
Operating profit.................................................................... 184,403 173,105 155,806
Interest expense.......................................................................... 61,996 71,820 79,315
Other income (expense), net 1,494 (447) 643
Earnings before income taxes, minority interest and cumulative effect of changes in
accounting principles.............................................................. 123,901 100,838 77,134
Income taxes.............................................................................. 38,703 41,343 30,254
Minority interest in subsidiaries' losses, net 320 1,009 1,517
Earnings before cumulative effect of changes in accounting principles............... 85,518 60,504 48,397
Cumulative effect of changes in accounting principles 14,332 -- --
Net earnings $ 99,850 60,504 48,397
Earnings per share before cumulative effect of changes in accounting principles........... $ 2.23 1.61 1.30
Cumulative effect of changes in accounting principles .37 -- --
Earnings per share $ 2.60 1.61 1.30
Weighted average shares 38,374 37,593 37,253
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
24

<PAGE>
Multimedia, Inc. and Subsidiaries
Consolidated Statements of Stockholders' Equity
(Deficit)
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(IN THOUSANDS)
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Common Stock:
Balance at beginning of year........................................................ $ 3,680 3,507 3,460
Stock options exercised 41 173 47
Balance at end of year 3,721 3,680 3,507
Additional paid-in capital:
Balance at beginning of year........................................................ 164,367 140,435 131,034
Stock options exercised............................................................. 6,882 7,676 2,939
Tax benefit from exercise of employee stock options................................. 2,084 12,875 2,963
Amortization of stock options 4,356 3,381 3,499
Balance at end of year 177,689 164,367 140,435
Retained earnings (deficit):
Balance at beginning of year........................................................ (458,780) (519,284) (567,681)
Net earnings 99,850 60,504 48,397
Balance at end of year (358,930) (458,780) (519,284)
$(177,520) (290,733) (375,342)
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
25

<PAGE>
Multimedia, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(IN THOUSANDS)
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings.......................................................................... $ 99,850 60,504 48,397
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization...................................................... 50,200 42,982 38,448
Amortization of film contract rights............................................... 14,035 18,277 15,119
Amortization of debt issue costs................................................... 1,117 1,058 1,014
Cumulative effect of changes in accounting principles.............................. (14,332) -- --
Minority interest in subsidiaries' losses, net..................................... (320) (1,009) (1,517)
Amortization of stock options...................................................... 4,356 3,381 3,499
Gain on disposal of assets, net.................................................... (739) -- --
Increase (decrease) in deferred income taxes....................................... (3,516) 788 (1,744)
(Increase) decrease in current assets:
Trade accounts receivable....................................................... (6,276) (6,830) (4,325)
Inventories, deferred income tax benefits, deferred program costs, and prepaid
expenses and other........................................................... (7,972) 12 657
Increase (decrease) in current liabilities:
Accounts payable, accrued payroll and accrued expenses.......................... 8,144 6,133 5,632
Accrued interest................................................................ (5,412) (1,887) 1,679
Income taxes payable............................................................ 17,199 7,884 494
Unearned income 1,714 1,299 2,512
Net cash flows provided by operating activities 158,048 132,592 109,865
Cash flows from investing activities:
Additions to property, plant and equipment............................................ (47,378) (37,493) (32,187)
Proceeds from disposal of assets...................................................... 4,678 -- --
Acquisitions of properties............................................................ (13,170) (78,710) (23,338)
Other (4,485) 1,224 795
Net cash provided by (used for) investing activities (60,355) (114,979) (54,730)
Cash flows from financing activities:
Proceeds from borrowings.............................................................. -- -- 15,937
Long-term debt retired, net........................................................... (80,998) (11,130) (57,689)
Film contract payments................................................................ (17,454) (16,463) (15,162)
Proceeds from exercise of employee stock options...................................... 6,923 7,849 2,986
Other 272 10 406
Net cash provided by (used for) financing activities (91,257) (19,734) (53,522)
Increase (decrease) in cash and cash equivalents......................................... 6,436 (2,121) 1,613
Cash and cash equivalents, beginning of year 4,598 6,719 5,106
Cash and cash equivalents, end of year $ 11,034 4,598 6,719
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
26

<PAGE>
Multimedia, Inc. and Subsidiaries
Consolidated Balance Sheets
DECEMBER 31, 1993 AND 1992
(IN THOUSANDS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
ASSETS 1993 1992
<S> <C> <C>
Current assets:
Cash and cash equivalents........................................................................ $ 11,034 4,598
Trade accounts receivable, less allowances for discounts and uncollectible accounts of $3,713 in
1993 and $3,945 in 1992........................................................................ 85,756 80,937
Inventories...................................................................................... 4,408 4,602
Deferred income tax benefits..................................................................... 8,856 8,108
Film contract rights............................................................................. 8,476 9,231
Deferred program costs........................................................................... 9,670 4,039
Prepaid expenses and other 5,516 3,736
Total current assets 133,716 115,251
Property, plant and equipment, at cost:
Land and land improvements....................................................................... 5,313 5,222
Buildings........................................................................................ 39,155 38,713
Broadcasting equipment........................................................................... 53,898 63,100
Publishing equipment............................................................................. 58,599 57,566
Cable equipment.................................................................................. 272,899 243,240
Other equipment and fixtures..................................................................... 68,559 55,171
Construction in progress 1,710 436
500,133 463,448
Less accumulated depreciation 259,371 244,938
Net property, plant and equipment............................................................. 240,762 218,510
Intangible assets, net.............................................................................. 251,356 269,141
Other assets 29,340 25,043
$ 655,174 627,945
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current installments of long-term debt........................................................... $ 393 1,999
Accounts payable................................................................................. 20,557 16,756
Accrued interest................................................................................. 2,999 8,411
Accrued payroll.................................................................................. 5,884 5,834
Accrued expenses................................................................................. 30,465 26,281
Income taxes payable............................................................................. 15,432 1,072
Film contracts payable........................................................................... 8,540 12,758
Unearned income 19,416 17,702
Total current liabilities 103,686 90,813
Long-term debt, excluding current installments...................................................... 664,604 743,996
Deferred income taxes............................................................................... 44,046 64,792
Other liabilities................................................................................... 2,837 1,236
Minority interest................................................................................... 17,521 17,841
Stockholders' equity (deficit):
Common stock of $.10 par value per share. Authorized 100,000,000 shares and issued 37,210,000
shares in 1993 and 36,803,000 shares in 1992................................................... 3,721 3,680
Additional paid-in capital....................................................................... 177,689 164,367
Retained earnings (deficit) (358,930) (458,780)
Total stockholders' equity (deficit) (177,520) (290,733)
$ 655,174 627,945
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
27

<PAGE>
Multimedia, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Multimedia,
Inc. and subsidiaries. Significant intercompany items are eliminated in
consolidation.
REVENUE RECOGNITION
Revenue is recognized when programming and advertising are aired or
printed, or when services are rendered.
CASH EQUIVALENTS
Cash equivalents include investments with banks with original maturities of
three months or less. Cash investments with banks totalled $1,981,000 at
December 31, 1993. There were no investments with banks at December 31, 1992.
INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out) or market
(net realizable value) and include newsprint and supplies.
DEPRECIATION
Depreciation for financial reporting purposes is calculated principally on
the straight-line basis over the estimated useful lives of the respective
assets. Depreciation expense for 1993, 1992 and 1991 was $35,422,000,
$31,710,000 and $29,140,000, respectively.
OTHER ASSETS
DEFERRED LOAN COSTS
Deferred loan costs include amounts incurred in connection with raising
bank and Senior Note debt. The costs are amortized using the interest method
over periods up to 10 years.
DEFERRED COSTS
Deferred costs include amounts deferred during the start-up and prematurity
periods for cable systems under development, and costs associated with the
acquisition of security accounts. These costs are amortized on a straight-line
basis over periods up to 15 years.
FILM CONTRACTS
Film contract rights represent agreements with film syndicators for
television program material. When the program or film becomes available for
telecasting, the cost of the contract is recorded as an asset and the
corresponding contractual obligation as a liability. The cost is amortized over
the expected number of telecasts. The portion of the cost to be amortized within
one year and after one year are reflected in the consolidated balance sheets as
current and noncurrent assets, respectively. The payments under these contracts
due within one year and after one year are similarly classified as current and
noncurrent liabilities.
INTANGIBLE ASSETS
Intangible assets, which include cable television franchise rights,
represent the excess of the cost of properties acquired over the amounts
assigned to the net tangible assets at dates of acquisition. Intangible assets
arising from acquisitions after October 31, 1970, are amortized on a
straight-line basis over periods up to 40 years. Intangibles acquired prior to
October 31, 1970, will be amortized only to the extent there is a permanent
decline in value.
INTEREST RATE SWAP AND CAP AGREEMENTS
The interest rate swap agreements are being accounted for as a hedge of the
obligation and accordingly, the net swap settlement amount is recorded as
28

<PAGE>
Multimedia, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(NOTE 1 CONTINUED)
an adjustment to interest expense in the period incurred. The net swap
settlement amounts for 1993, 1992 and 1991 resulted in charges to interest
expense of $2.1 million, $7.8 million and $5.4 million, respectively.
The interest rate swap and cap agreements expire at various times from 1994
through 1997. The Company believes that the sellers of the swap and cap
agreements will be able to meet their obligations under the agreements.
INCOME TAXES
Effective January 1, 1993, the Company adopted SFAS No. 109, Accounting for
Income Taxes, and has reported the cumulative effect of that change in the
method of accounting for income taxes in the 1993 consolidated statement of
earnings. SFAS No. 109 requires a change from the deferred method of accounting
for income taxes of APB Opinion 11 to the asset and liability method of
accounting for income taxes. Under the asset and liability method of SFAS No.
109, deferred tax assets and liabilities are recognized for the estimated future
tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred income tax assets and liabilities are measured using enacted tax
rates in effect for the year in which those temporary differences are expected
to be recovered or settled. Under SFAS No. 109, the effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
Pursuant to the deferred method under APB Opinion 11, which was applied in
1992 and prior years, deferred income taxes are recognized for income and
expense items that are reported in different years for financial reporting
purposes and income tax purposes using the tax rate applicable for the year of
the calculation. Under the deferred method, deferred taxes are not adjusted for
subsequent changes in tax rates.
POSTRETIREMENT BENEFITS
The Company adopted SFAS No. 106, Employers' Accounting for Postretirement
Benefits Other Than Pensions, as of January 1, 1993, which requires accrual,
during an employee's active years of service, of the expected costs of providing
postretirement benefits to employees and their beneficiaries and dependents. The
Company's accumulated postretirement benefit obligation as of December 31, 1992,
based upon calculations performed by the Company's actuarial consultant, was
$1.1 million, net of tax, which has been reported in the 1993 consolidated
statement of earnings.
EARNINGS PER SHARE
Earnings per share are computed based on the weighted average number of
shares of common stock and common stock equivalents outstanding during each year
retroactively adjusted to give effect to the stock split. Common stock
equivalents are dilutive stock options determined by using the treasury stock
method.
MINORITY INTEREST
Minority interest represents the minority shareholders' proportionate share
of the equity and the income or loss of certain consolidated subsidiaries,
primarily WKYC-TV, Inc. The Company owns 51% of WKYC-TV, Inc.
29

<PAGE>
Multimedia, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(2) RECAPITALIZATION MERGER
On September 20, 1985, the Company's shareholders approved a
Recapitalization Agreement and Plan of Merger (the Recapitalization Merger). The
Recapitalization Merger was consummated on October 1, 1985, and was accounted
for as a redemption not subject to purchase accounting. This resulted in a
charge to retained earnings of approximately $887 million.
(3) ACQUISITIONS
In 1993, the Company purchased the accounts of existing security alarm
monitoring companies for approximately $12,100,000 in cash. The purchase price
has been assigned to property, plant and equipment ($6,100,000) and other assets
($6,000,000). Other acquisitions for 1993 included the purchase of the remaining
20% interest in an existing Illinois cable television franchise. The purchase
price is considered immaterial.
On December 3, 1992, the Company purchased Indiana cable television systems
with approximately 28,000 subscribers for approximately $58,000,000 in cash. The
purchase price has been assigned to property, plant and equipment ($18,700,000),
intangibles ($37,100,000) and other assets ($2,200,000).
The following unaudited pro forma summary presents the results as if the
acquisition of Indiana cable television systems had occurred at the beginning of
each respective period presented, after giving effect to certain adjustments
including interest expense on the acquisition debt. The pro forma results do not
necessarily represent results which would have occurred if the acquisition had
occurred on the date indicated nor does it indicate results which may occur in
the future.
(In thousands except per-share data)
<TABLE>
<CAPTION>
1992 1991
<S> <C> <C>
Total operating revenues.......... $ 585,878 533,278
Net earnings...................... 58,105 44,946
Earnings per share 1.55 1.21
</TABLE>
In February 1992, the Company purchased an Illinois cable television
system with approximately 5,000 subscribers for approximately $9,500,000 in
cash. The purchase price has been assigned to property, plant and equipment
($8,400,000) and intangibles ($1,100,000).
In 1992, the Company purchased the accounts of existing security alarm
monitoring companies for approximately $8,500,000 in cash. The purchase price
has been assigned to property, plant and equipment ($4,200,000) and other assets
($4,300,000).
Other acquisitions for 1992 included purchases of the remaining 20%
interest in two existing Illinois cable television franchises. The purchase
price of these interests is considered immaterial.
In 1991, the Company purchased the accounts of existing security alarm
monitoring companies for approximately $16,500,000 in cash. The purchase price
has been assigned to property, plant and equipment ($2,300,000), intangibles
($9,000,000) and other assets ($5,200,000).
On September 13, 1991, the Company purchased certain television and
first-run syndicated television assets from Carolco Pictures, Inc.'s wholly
owned subsidiary Orbis Communications, Inc. for $5,000,000 in cash. The purchase
price of these assets has been included in other assets. Other acquisitions for
1991 included a small cable television system and the purchase of the remaining
20% interest in two Illinois cable television franchises. The purchase price of
these
30

<PAGE>
Multimedia, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(NOTE 3 CONTINUED)
other acquisitions is considered immaterial.
The operations of all acquisitions for the three-year period ending
December 31, 1993, have been included in the consolidated statements of earnings
since the dates of acquisition. Other than the Indiana cable television systems,
the pro forma effects of the acquisitions on operating revenues, net earnings
and net earnings per share for the year of acquisition and for the year
immediately preceding the year of acquisition are not significant and are not
presented.
(4) OTHER ASSETS
Other assets include (in thousands):
<TABLE>
<CAPTION>
1993 1992
<S> <C> <C>
Deferred loan costs, net of
accumulated amortization.......... $ 6,780 7,918
Deferred costs, net of accumulated
amortization...................... 14,376 12,295
Film contract rights................. 318 771
Other 7,866 4,059
Total $ 29,340 25,043
</TABLE>
(5) INTANGIBLE ASSETS
Intangible assets include (in thousands):
<TABLE>
<CAPTION>
1993 1992
<S> <C> <C>
Excess of cost over net tangible
assets......................... $216,953 219,149
Franchise costs................... 79,165 85,473
Less accumulated amortization..... (63,803) (54,522)
Amounts not being amortized 19,041 19,041
Total $251,356 269,141
</TABLE>
(6) LONG-TERM DEBT
A summary of long-term debt follows (in thousands):
<TABLE>
<CAPTION>
1993 1992
<S> <C> <C>
Bank notes under bank credit
facility....................... $ 227,500 306,500
Senior notes...................... 400,000 400,000
Note payable...................... 36,750 36,750
Notes payable in quarterly or
annual installments through
June 1998 747 2,745
Total long-term debt........... 664,997 745,995
Less current installments 393 1,999
Long-term debt, excluding
current installments $ 664,604 743,996
</TABLE>
BANK NOTES
The bank credit facility is comprised of a $415 million revolving credit
line and a $166 million term loan. The commitment levels which remain in effect
during the years ended are as follows (in thousands):
<TABLE>
<CAPTION>
Revolving Term
Date Credit Loan Total
<S> <C> <C> <C>
December 31, 1993........... $415,000 166,000 581,000
December 31, 1994........... 355,000 142,000 497,000
December 31, 1995........... 290,000 116,000 406,000
December 31, 1996........... 225,000 90,000 315,000
December 31, 1997........... 160,000 64,000 224,000
December 31, 1998........... 90,000 36,000 126,000
December 31, 1999........... 30,000 12,000 42,000
June 30, 2000 -- -- --
</TABLE>
The bank credit facility has a floating interest rate based on the
Company's debt to annualized operating cash flow ratio. At December 31, 1993,
the interest rate for these bank notes was the LIBOR rate plus 5/8% or the prime
rate. A commitment fee of 3/8% per annum on the unused portion of the revolving
credit
31

<PAGE>
Multimedia, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(NOTE 6 CONTINUED)
commitment must be paid quarterly. The Company has the option under the bank
Credit Agreement to seek bids from the various banks for alternative interest
rates. The Company has interest rate swap agreements which effectively fix the
LIBOR rate on $100 million of its floating rate debt at approximately 5.4%.
These interest rate swap agreements expire at various times between October 1994
and November 1996. The Company also has interest rate cap agreements which
effectively cap LIBOR on $50 million of its floating rate debt at approximately
7.0%, which expire at various times between October 1994 and December 1995. In
addition, the Company has an interest rate cap which caps LIBOR at 7% on $25
million, which begins in 1996 and expires in 1997.
SENIOR NOTES
The Senior Notes are comprised of five series which have maturities from
1995 through 2005 with an original average life of 10 years and bear interest at
a composite rate of approximately 10.7%. The remaining average life is 6.5
years. Information regarding each series follows (in thousands):
<TABLE>
<CAPTION>
Principal Interest
Due Dates Amount Rate (2)
<S> <C> <C> <C>
Series A.......... June 29, 1995 $ 30,000 10.23%
Series B.......... June 29, 1996 30,000 10.36%
Series C.......... June 29, 1997 30,000 10.50%
Series D.......... June 29, 1998 70,000 10.61%
Series E(1)....... June 29, 1999 240,000 10.92%
through
June 29, 2005
$400,000
</TABLE>
(1) ONE-SEVENTH OF THE PRINCIPAL AMOUNT DUE EACH JUNE 29 FOR THE YEARS 1999 TO
2005.
(2) INTEREST IS PAYABLE SEMI-ANNUALLY ON JUNE 29 AND DECEMBER 29.
COVENANTS
The bank Credit Agreement and/or Senior Notes contain covenants which limit
(i) payment of dividends; (ii) purchase of capital stock of the Company; (iii)
incurrence of indebtedness; (iv) acquisitions outside of the Company's current
lines of business; (v) liens; (vi) investments; (vii) transactions with
affiliates; (viii) sales of assets; and (ix) certain extraordinary transactions.
In addition, one or both of the agreements require the Company to maintain
specific ratios of debt to annualized operating cash flow, annualized operating
cash flow to interest expense and annualized operating cash flow to fixed
charges. Management believes it is in compliance with all covenants.
NOTE PAYABLE
In addition to purchasing a 51% equity interest in WKYC in 1990 from NBC,
the Company purchased a 51% interest in a $75 million principal promissory note
of WKYC which was held by NBC. As a result, 51% of the note is now due to the
Company, and NBC retained a 49% interest in that note ($36.8 million), which
bears interest at a rate of 10% payable semi-annually on July 15 and January 15.
The principal amount is due in full on December 26, 1997.
OTHER
The other notes payable include $1,537,000 at December 31, 1992, from a
$20,000,000 commitment to the Company which expires on July 29, 1994. There were
no outstanding borrowings at December 31, 1993, under this commitment. The
interest rate on this commitment is the overnight Federal Funds rate plus 1.50%.
A commitment fee of 1/16% per annum on the unused portion of the commitment must
be paid quarterly. The remaining notes payable have fixed interest rates ranging
from 8% to 11.25%.
32

<PAGE>
Multimedia, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(NOTE 6 CONTINUED)
The minimum aggregate annual repayments of long-term debt during the next
five years, excluding bank notes under the Credit Agreement, are as follows (in
thousands): 1994, $393; 1995, $30,254; 1996, $30,062; 1997, $66,777; 1998,
$70,012.
(7) DISCLOSURES ABOUT FAIR VALUE OF
FINANCIAL INSTRUMENTS
The carrying amount of cash and cash equivalents, trade accounts
receivable, accounts payable and accrued expenses approximates fair value
because of the short maturity of these instruments. The fair value of the
interest rate swaps or caps is the estimated amount that the Company would
receive or pay to eliminate the swap or cap agreements at the reporting date,
taking into account current interest rates and the current credit-worthiness of
the swap counterparties. The fair value of the Company's long-term debt is based
on estimates of market prices for the same or similar issues or on the current
rates offered to the Company for debt of the same remaining maturities. The fair
value of film contracts payable is the present value of the future obligations.
Estimated fair values of the Company's financial instruments are as follows
(in thousands):
<TABLE>
<CAPTION>
<S> <C> <C>
1993
CARRYING FAIR
AMOUNT VALUE
Assets:
Interest rate cap agreements..... $ 624 82
Liabilities:
Interest rate swap agreements.... -- 2,610
Long-term debt:
Bank notes under bank credit
facility...................... 227,500 227,500
Senior notes.................. 400,000 479,278
Note payable.................. 36,750 41,830
Other notes payable........... 747 747
Film contracts payable 8,540 8,338
</TABLE>
(8) INCOME TAXES
As discussed in Note 1, the Company adopted SFAS No. 109 as of January 1,
1993. The cumulative effect of this change in accounting for income taxes of
$15,420,000 was determined as of January 1, 1993, and is reported separately in
the consolidated statement of earnings for the year ended December 31, 1993.
Prior-years' financial statements have not been restated to apply the provisions
of SFAS No. 109.
Total income tax expense for the year ended December 31, 1993, was
allocated as follows (in thousands):
<TABLE>
<S> <C>
Income from continuing operations................. $38,703
Cumulative effect of change in accounting
principle -- adoption of SFAS No. 106.......... (755)
Stockholders' equity -- additional paid-in capital
for compensation expense for tax purposes in
excess of amounts recognized for financial
reporting purposes (2,084)
Total income tax expense $35,864
</TABLE>
33

<PAGE>
Multimedia, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(NOTE 8 CONTINUED)
Income tax expense (benefit) includes
(in thousands):
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Federal:
Current.............. $28,905 33,821 27,071
Deferred 1,844 263 (1,817)
30,749 34,084 25,254
State:
Current.............. 7,783 7,369 4,479
Deferred 171 (110) 521
7,954 7,259 5,000
Total $38,703 41,343 30,254
</TABLE>
The items comprising the difference in taxes on income computed at the U.S.
statutory rates (35% in 1993 and 34% in 1992 and 1991) and the amounts provided
follow (in thousands):
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Computed expected tax
expense................... $43,365 34,285 26,226
Increase (reduction) in tax
expense resulting from:
State income taxes, net
of Federal income tax
benefit................ 5,170 4,791 3,300
Amortization............ 1,796 1,756 662
Reduction for settlement
of IRS exam............ (12,372) -- --
Loss of subsidiary not
consolidated for tax
purposes............... -- -- 1,531
Additional provision for
(reduction in) income
taxes.................. (365) 799 (2,141)
Other, net 1,109 (288) 676
Actual tax expense $38,703 41,343 30,254
</TABLE>
The significant components of deferred income tax expense attributable to
income from continuing operations for the year ended December 31, 1993, are as
follows (in thousands):
<TABLE>
<S> <C>
Deferred tax expense (exclusive of the effect of
the following item)............................. $1,195
Adjustment to deferred tax assets and liabilities
for enacted changes in tax laws and rates 820
$2,015
</TABLE>
For the years ended December 31, 1992 and 1991, deferred income tax expense
(benefit) of $153,000 and ($1,296,000), respectively, results from timing
differences in the recognition of income and expense for income tax and
financial reporting purposes. The sources and tax effects of these timing
differences are presented below (in thousands):
<TABLE>
<CAPTION>
1992 1991
<S> <C> <C>
Accelerated depreciation.............. $ 304 (1,787)
Amortization.......................... (1,108) 2,118
Accrued expenses and allowances....... (717) 42
Other, net 1,674 (1,669)
$ 153 (1,296)
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December 31,
1993, are presented on page 35 (in thousands):
34

<PAGE>
Multimedia, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(NOTE 8 CONTINUED)
<TABLE>
<S> <C>
Deferred tax assets:
Amortization of stock options.................. $ 3,214
Accrued expenses and allowances................ 10,294
Total gross deferred tax assets............. 13,508
Less -- valuation allowance --
Net deferred tax assets 13,508
Deferred tax liabilities:
Accelerated depreciation....................... 38,911
Amortization................................... 9,018
Other, net 769
Total gross deferred tax liabilities 48,698
Net deferred tax liability $35,190
</TABLE>
Management believes that a valuation allowance is not considered necessary
based upon the level of historical taxable income and the projections for future
taxable income over the periods during which the deferred tax assets are
deductible.
The Internal Revenue Service (IRS) has examined the Company's federal
consolidated income tax returns through 1989. In 1993 the Company reached an
agreement with the IRS as to the 1982 through 1986 tax liabilities. The
agreed-to settlement principally involves purchase price allocations related to
cable acquisitions and characterization of professional fees incurred in 1985
and was less than the amount previously accrued. This agreement resulted in a
reduction in income taxes as previously described.
The IRS has issued notices of deficiencies with regard to the Company's tax
returns for 1987 through 1989. The deficiencies principally involve various
acquisition issues related primarily to cable. The ultimate resolution of these
matters cannot be ascertained at this time. The Company is continuing to
vigorously contest the assessments. The Company believes that it has adequately
provided for agreed-upon and potential deficiencies, including interest.
(9) COMMON STOCK, STOCK OPTIONS AND
PREFERRED STOCK
On April 17, 1991, the Company's Board of Directors effected a
three-for-one stock split by declaring a stock dividend of two shares on each
outstanding share. The record date for the stock dividend was April 19, 1991,
and the payment date was April 29, 1991.
Shares were issued and recorded in the accounts by transferring the
aggregate par value of the shares issued from additional paid-in capital to
common stock. All common stock data in the financial statements have been
retroactively adjusted to give effect to the common stock split.
The Company has adopted five stock option plans (the Restricted Option
Plan, Performance Option Plan, New Key Executive Plan, 1991 Stock Option Plan
and Director Option Plan) and signed stock option agreements with Phillip J.
Donahue and Sally Jessy Raphael. Each option is for one share of common stock.
All of the 1,513,494 authorized options, exercisable
at $.33 per share, under the Restricted Option Plan
were granted in 1985. Fair market value on the date of
grant was $3.33 per share. Information regarding
options under the Restricted Option Plan follows:
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Outstanding at January
1.................... -- 679,810 790,011
Exercised -- 679,810 110,201
Outstanding at December
31 -- -- 679,810
Exercisable at December
31 -- -- 679,810
</TABLE>
35

<PAGE>
Multimedia, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(NOTE 9 CONTINUED)
All of the 1,032,498 authorized options, exercisable at $3.33 per share,
under the Performance Option Plan were granted in 1985. Fair market value on the
date of grant was $3.33 per share. The Performance Options became exercisable as
defined operating cash flow goals of the Company were equaled or exceeded.
Information regarding options under the Performance Option Plan follows:
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Outstanding at January
1.................... 200,000 264,555 367,896
Exercised -- 64,555 103,341
Outstanding at December
31 200,000 200,000 264,555
Exercisable at December
31 200,000 200,000 264,555
</TABLE>
The forfeited shares from the Restricted Option Plan and the Performance
Option Plan are now available for options which may be granted under the New Key
Executive Plan.
The New Key Executive Plan, 1991 Stock Option Plan, Director Stock Option
Plan and agreements with Phillip J. Donahue and Sally Jessy Raphael authorize
the granting of 8,085,372 options. Generally, options granted under these plans
are exercisable to the extent of 20% per year, beginning approximately one year
following date of grant, provided the holder of the option is still an employee
of or is rendering services to the Company at such time. Option prices, which
are established by the Board of Directors, have been determined based on the
market values on dates of grant, except for 1,542,400 options granted in 1987
through 1992 at prices ranging from $3.33 to $23.00 per share. Information
regarding options under the New Key Executive Plan, 1991 Stock Option Plan,
Director Stock Option Plan and Donahue and Raphael agreements follows:
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Outstanding at
January 1:
Options......... 2,755,700 3,340,173 2,764,101
Price........... $3.33- $3.33- $3.33-
$29.00 $28.67 $26.00
Granted:
Options......... 385,000 448,000 967,100
Price........... $32.13 $15.00- $3.33-
$35.00 $29.00 $28.67
Forfeited or
cancelled:
Options......... 178,280 38,550 142,800
Price........... $3.33- $15.21- $3.33-
$35.00 $27.10 $27.10
Exercised:
Options......... 406,780 993,923 248,228
Price........... $3.33- $3.33- $3.33-
$27.10 $27.10 $24.50
Outstanding at
December 31:
Options......... 2,555,640 2,755,700 3,340,173
Price........... $3.33- $3.33- $3.33-
$35.00 $29.00 $28.67
Exercisable at
December 31:
Options......... 1,365,698 1,171,770 1,647,913
Price........... $3.33- $3.33- $3.33-
$35.00 $28.67 $28.67
</TABLE>
Compensation expense of $4,356,000, $3,381,000 and $3,499,000 is included
in selling, general and administrative expense in 1993, 1992 and 1991,
respectively, related to the amortization of the deferred compensation on the
options issued under the above plans.
The Company has 600,000 shares of authorized but unissued 5% convertible
cumulative preferred stock of $20 par value per share.
36

<PAGE>
Multimedia, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(10) SHAREHOLDER RIGHTS PLAN
In September 1989, the Company declared a dividend distribution of one
common share purchase Right for each outstanding share of the Company's common
stock. The Rights are designed to assure that all the Company's shareholders,
other than an acquiring shareholder, receive equal treatment in the event of any
proposed takeover of the Company. Each Right will entitle shareholders to buy
one share of common stock at an exercise price of $133.33.
The Rights will be exercisable only if a person or group acquires 15% or
more of the Company's common stock or announces a tender offer, the consummation
of which would result in ownership by a person or group of 15% or more of the
common stock. If a person or group acquires 15% or more of the Company's
outstanding common stock, each holder
of a Right, other than Rights beneficially owned by the acquiring person, will
have the right to purchase common shares of the Company having a market value of
twice the exercise price of the Right. If the Company is acquired in a merger or
other business combination transaction, each holder of a Right will thereafter
have the right to purchase common shares of the acquiring company which at the
time of such transaction will have a market value of twice the exercise price of
the Right.
Prior to the acquisition by a person or group of beneficial ownership of
15% or more of the Company's common stock, the Rights are redeemable for
one-third of one cent per Right at the option of the Board of Directors. If
unexercised, the Rights expire September 6, 1999.
(11) OTHER INCOME (EXPENSE)
Other income (expense) includes (in thousands):
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Gain on disposal of assets,
net........................... $ 739 -- --
Interest income.................. 904 82 174
Other, net (149) (529) 469
$1,494 (447) 643
</TABLE>
In January 1993, the Company sold its mobile video production business for
$4.5 million, which resulted in a gain of $2.3 million before taxes. Gain on
disposal of assets, net, in 1993 includes approximately $1.0 million in
writeoffs of cable equipment related to rebuilds. Interest income includes $.8
million in refunds received from the IRS related to the settlement of its audits
of the Company's 1982 through 1986 federal consolidated income tax returns.
(12) EMPLOYEE BENEFIT PLANS
PENSION PLANS
The Company and its subsidiaries have noncontributory pension plans which
cover substantially all employees who meet age and service requirements. The
pension plans provide defined benefits that are based on years of credited
service, average compensation (as defined) and the primary social security
benefit. Contributions to the plans are based on the Entry Age Normal actuarial
funding method and are limited to amounts that are currently deductible for tax
reporting purposes.
The weighted average discount rate and the rate of increase in future
compensation levels used in determining the actuarial present value of the
projected
37

<PAGE>
Multimedia, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(NOTE 12 CONTINUED)
benefit obligation were 7.25% and 6.5%, respectively, in 1993, and 8% and 6.5%,
respectively, in 1992. The expected long-term rate of return on assets was 8% in
1993 and 1992.
The following tables set forth the pension plans' funded status and amounts
recognized in the Company's consolidated financial statements at December 31,
1993, 1992 and 1991 (in thousands):
<TABLE>
<CAPTION>
1993 1992
<S> <C> <C>
Actuarial present value of accumulated
benefit obligation, including
vested benefits of $36,308 in 1993
and $30,975 in 1992 $37,854 32,382
Projected benefit obligation.......... $50,603 41,849
Plan assets at fair value 59,817 56,453
Excess of plan assets over the
projected benefit obligation....... $ 9,214 14,604
Unrecognized net gain................. (2,704) (8,158)
Unrecognized net asset being amortized
over an average of 17 years........ (5,180) (5,755)
Other (1,298) (332)
Prepaid pension costs included in
other assets $ 32 359
</TABLE>
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Net pension expense
(income) included the
following components:
Service cost............ $ 2,206 1,942 2,037
Interest cost........... 3,312 3,029 2,795
Actual return on plan
assets.................. (5,310) (3,547) (11,263)
Net deferral and
amortization 20 (1,654) 7,111
Net pension expense
(income) $ 228 (230) 680
</TABLE>
THRIFT PLAN
The Company and its subsidiaries have a salary deferral thrift plan for all
eligible employees. The Company and its subsidiaries match tax-deferred
contributions by employees up to 2% of their salaries. Company contributions
charged to operations in 1993, 1992 and 1991 were $1,359,000, $1,216,000 and
$1,122,000, respectively. Thrift plan costs are funded biweekly.
OTHER POSTRETIREMENT BENEFITS
The Company sponsors unfunded postretirement benefit plans that provide
health care, life insurance and other postretirement benefits to certain retired
employees. The health care plans generally include participant contributions,
co-insurance provisions and limitations on the Company's obligation and service-
related eligibility requirements.
Effective January 1, 1993, the Company adopted SFAS No. 106, Employers'
Accounting for Postretirement Benefits Other Than Pensions. SFAS No. 106
requires the accrual method of accounting for these benefits, rather than the
Company's previous policy, which was to record these benefits as they were paid.
The effect of SFAS No. 106 on current-year earnings after recording the
cumulative effect of adopting SFAS No. 106 was not material.
The following table presents the amounts recognized in the Company's
consolidated balance sheet at December 31, 1993 (in thousands):
38

<PAGE>
Multimedia, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(NOTE 12 CONTINUED)
<TABLE>
<S> <C>
Accumulated postretirement benefit obligation
Retirees........................................ $1,428
Fully eligible participants..................... 161
Other active plan participants 436
2,025
Employer contributions (164)
Net postretirement benefit liability included in
other liabilities $1,861
</TABLE>
Net periodic postretirement benefit cost for 1993 consisted of the
following components (in thousands):
<TABLE>
<S> <C>
Service cost................................... $ 35
Interest cost 147
Net periodic postretirement
benefit cost $182
</TABLE>
The weighted average discount rate used in determining the accumulated
benefit obligation was 7%.
The health care cost trend rate was assumed to be 14% for the first year grading
down to 6% (ratably over 8 years). An increase in the assumed health care cost
trend rates by one percentage point in each year would increase the Accumulated
Postretirement Benefit Obligation as of December 31, 1993, by $165,658 and the
aggregate of service and interest cost for 1993 by $23,694.
SUPPLEMENTAL RETIREMENT PROGRAM
In 1991 the Company adopted an unfunded Supplemental Retirement Program
(SERP) not included in the above table for certain executive officers. The
actuarial present value of accumulated benefit obligation at December 31, 1993,
and 1992 was $1,355,000 and $749,000, respectively. The expense for 1993 and
1992 was $606,000 and $519,000, respectively. The amounts for 1991 were not
material.
(13) QUARTERLY OPERATING RESULTS (UNAUDITED)
The Company's quarterly operating results for 1993 and 1992 are presented
below (in thousands except
per-share data).
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Quarter Ended
<CAPTION>
March 31 June 30 September 30 December 31
<S> <C> <C> <C> <C>
1993
Operating revenues............................................. $144,069 163,527 153,296 173,682
Operating profit............................................... 38,130 46,605 45,737 53,931
Earnings before cumulative effect of changes in accounting
principles.................................................. 15,198 18,267 30,241 21,812
Net earnings................................................... 29,530 18,267 30,241 21,812
Earnings per share before cumulative effect of changes in
accounting principles....................................... .40 .48 .79 .56
Net earnings per share......................................... .77 .48 .79 .56
1992
Operating revenues............................................. $126,006 142,845 140,538 167,392
Operating profit............................................... 34,763 45,438 43,171 49,733
Net earnings................................................... 10,370 15,813 15,080 19,241
Net earnings per share .28 .42 .40 .51
</TABLE>
39

<PAGE>
Multimedia, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(14) INDUSTRY SEGMENTS
Financial information by industry segment for each of the years in the
<TABLE>
<CAPTION>
three-year period ended December 31, 1993, is summarized below (in thousands):
<S> <C> <C> <C>
1993 1992 1991
Operating revenues:
Newspapers............ $135,920 132,485 128,954
Broadcasting.......... 155,718 160,529 150,643
Cable................. 164,598 144,383 129,855
Entertainment......... 161,588 129,122 109,205
Security 16,750 10,262 5,669
$634,574 576,781 524,326
Operating profit:
Newspapers............ 37,667 37,698 34,554
Broadcasting.......... 38,816 38,191 34,693
Cable................. 56,645 50,692 45,581
Entertainment......... 63,285 55,841 50,931
Security 1,838 1,818 1,056
198,251 184,240 166,815
Less corporate expenses (13,848) (11,135) (11,009)
$184,403 173,105 155,806
Depreciation and
amortization:
Newspapers............ 6,049 5,962 5,594
Broadcasting.......... 9,031 9,888 10,332
Cable................. 28,817 22,387 19,910
Entertainment......... 2,024 1,960 1,040
Security 4,140 2,640 1,429
50,061 42,837 38,305
Corporate 139 145 143
$ 50,200 42,982 38,448
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Additions to property,
plant and equipment:
Newspapers............ 4,611 6,785 4,974
Broadcasting.......... 4,025 5,142 3,797
Cable................. 32,413 22,159 20,775
Entertainment......... 497 574 281
Security 5,704 2,739 2,308
47,250 37,399 32,135
Corporate 128 94 52
$ 47,378 37,493 32,187
Identifiable assets:
Newspapers............ 89,473 90,872 89,255
Broadcasting.......... 192,596 200,679 208,585
Cable................. 256,990 251,700 181,474
Entertainment......... 50,222 35,792 30,986
Security 47,336 31,894 21,859
636,617 610,937 532,159
Corporate 18,557 17,008 24,126
$655,174 627,945 556,285
</TABLE>
The Company operates principally in five industries: newspapers,
broadcasting, cable television, entertainment and security alarms. Newspaper
operations involve the publication and distribution of both daily and non-daily
newspapers from which revenues are derived primarily from circulation and the
sale of advertising linage. Broadcasting operations involve the sale of time to
advertisers and network revenue. Cable operations involve the provision of
broadcast signals of television and radio stations owned by others and other
programming to subscribers whose monthly payments are the primary source of
revenues. Entertainment operations generate revenue from programming,
40

<PAGE>
Multimedia, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(NOTE 14 CONTINUED)
talent and production operations. Security operations involve the monitoring,
installation and servicing of security systems. Operating profit is total
revenues less operating expenses. Interest expense, net other income (expense)
and income taxes have been excluded in computing operating profit. Identifiable
assets by industry segment represent those assets used in the Company's
operations in that segment.
(15) CASH FLOW INFORMATION
Net cash provided by operating activities is further analyzed as follows
(in thousands):
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1993 1992 1991
Operating profit plus
depreciation,
amortization and
amortization of stock
options:
Newspapers............ $ 43,716 43,660 40,148
Broadcasting.......... 47,847 48,079 45,025
Cable................. 85,462 73,079 65,491
Entertainment......... 65,309 57,801 51,971
Security.............. 5,978 4,458 2,485
Corporate (9,354) (7,609) (7,367)
238,958 219,468 197,753
Cash payments for
interest................ (61,636) (72,649) (76,622)
Cash payments for taxes,
net of refunds.......... (32,016) (33,275) (30,942)
Amortization of film
contract rights......... 14,035 18,277 15,119
Other (1,293) 771 4,557
Net cash flows provided
by operating activities $158,048 132,592 109,865
</TABLE>
The Company entered into contracts for program rights totalling
$12,977,000, $14,218,000 and $15,320,000 for 1993, 1992 and 1991, respectively,
which are not reflected in the consolidated statements of cash flows or the
above schedule.
(16) COMMITMENTS
At December 31, 1993, the Company had commitments for purchases of film
contracts and property, plant and equipment of $11.8 million and $5.8 million,
respectively. The Company also had contracts at year-end to acquire security
subscribers for up to $1 million. Commitments relating to rebuilds and upgrades
to cable franchises to be performed from 1994 through 1996 were approximately
$11.6 million at year-end.
The Company has agreements with various non-profit community organizations
giving them a 20% equity interest in their particular cable television system.
The Company is required to purchase these equity interests after a period of not
less than seven and not more than 12 years from the date of the franchise
agreement depending upon when specified minimum profitability levels have been
achieved. The minimum buy-back commitment at December 31, 1993, was estimated at
approximately $1.8 million.
In addition, the Company periodically enters into contractual agreements
with talent in the entertainment and broadcasting businesses.
During the first quarter of 1994, the Company sold its radio stations in
Milwaukee, Wisconsin, and Shreveport, Louisiana, for a total of $7.2 million,
which resulted in a gain of approximately $3.6 million before taxes.
41

<PAGE>
Multimedia, Inc. and Subsidiaries
Independent Auditors' Report
The Board of Directors and Stockholders
Multimedia, Inc.:
We have audited the accompanying consolidated balance sheets of
Multimedia, Inc. and subsidiaries as of December 31, 1993 and 1992, and
the related consolidated statements of earnings, stockholders' equity
(deficit), and cash flows for each of the years in the three-year period
ended December 31, 1993. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on
our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
Multimedia, Inc. and subsidiaries at December 31, 1993 and 1992, and the
results of their operations and their cash flows for each of the years in
the three-year period ended December 31, 1993, in conformity with
generally accepted accounting principles.
As discussed in Notes 1 and 8 to the consolidated financial
statements, the Company changed its method of accounting for income taxes
in 1993 to adopt the provisions of the Financial Accounting Standards
Board's SFAS No. 109 ACCOUNTING FOR INCOME TAXES. As discussed in Notes 1
and 12, the Company also adopted the provisions of the Financial
Accounting Standards Board's SFAS No. 106, EMPLOYERS' ACCOUNTING FOR
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS, in 1993.
(KPMG Peat Marwick signature appears here)
KPMG Peat Marwick
GREENVILLE, SOUTH CAROLINA
FEBRUARY 11, 1994
42

<PAGE>
Multimedia, Inc. and Subsidiaries
Report of Management
The accompanying financial statements and other financial data were
prepared by the management of the Company, which has the responsibility
for the integrity of the information presented. The financial statements
have been prepared in conformity with generally accepted accounting
principles and, as such, include amounts that are the best estimates and
judgments of management with consideration given to materiality.
Management is further responsible for maintaining a system of
internal control, designed to provide reasonable assurance that the books
and records reflect the transactions of the Company and that its
established policies and procedures are carefully followed. Because of
inherent limitations in any system, there can be no absolute assurance
that errors or irregularities will not occur. Nevertheless, management
believes that the system of internal control provides reasonable
assurance that assets are safeguarded and that financial information is
objective and reliable.
The internal control system is supported by written policies and
procedures, by careful selection and training of qualified personnel, and
by an internal auditing function that independently evaluates and
formally reports on the adequacy and effectiveness of the system. In
addition, the Company's business ethics policy requires employees to
maintain the highest level of ethical standards in the conduct of the
Company's business.
The Company's financial statements have been audited by KPMG Peat
Marwick, independent certified public accountants. Their Independent
Auditor's Report, which is based on an audit made in accordance with
generally accepted auditing standards, expresses an opinion as to the
fair presentation of the financial statements. In performing their audit,
KPMG Peat Marwick considers the Company's internal control structure to
the extent they deem necessary in order to issue their opinion on the
financial statements.
The Board of Directors pursues its oversight role for the financial
statements through the Audit Committee, which consists solely of outside
directors. The Audit Committee meets periodically with management, the
internal auditors and the independent auditors to review matters relating
to financial reporting, the internal control system and the nature,
extent and results of audit efforts. The internal auditors and the
independent auditors have unrestricted access to the Audit Committee,
with and without the presence of management, to discuss accounting,
auditing and financial reporting matters. The Audit Committee also
recommends for approval to the Board of Directors the appointment of the
independent auditors.
MULTIMEDIA, INC.
FEBRUARY 11, 1994
43

<PAGE>

Multimedia, Inc. and Subsidiaries

Officers
Walter E. Bartlett
Chairman of the Board; President and
Chief Executive Officer

Robert E. Hamby Jr.
Senior Vice President -- Finance and Administration,
and Chief Financial Officer

Donald D. Sbarra
Senior Vice President -- Operations

Michael C. Burrus
Vice President;
President, Multimedia
Cablevision Co.

Wm. deBerniere Mebane
Vice President;
President, Multimedia
Newspaper Co.

Pat A. Servodidio
Vice President;
President, Multimedia
Broadcasting Co.

Robert L. Turner
Vice President;
President, Multimedia
Entertainment Co.

Alan D. Austin
Treasurer

Thomas L. Magaha
Vice President -- Finance and
Development, and Controller

J. Clyde Baucom
Vice President -- Personnel
and Benefits

Markeeta L. McNatt
Vice President -- Investor Relations
and Corporate Communications

Claudia I. Price
Vice President -- Taxes

David L. Freeman
Secretary

Sandra W. Harbert
Assistant Secretary

Karl E. Witzke
Assistant Controller

Board of Directors
Walter E. Bartlett 1
Chairman of the Board; President and
Chief Executive Officer, Multimedia, Inc.

George H. V. Cecil 2, 5
President, Biltmore Dairy Farms, Inc.

Rhea T. Eskew 4, 5
Consultant to the Company; former President,
Multimedia Newspaper Company

David L. Freeman 1, 3, 6
Secretary of the Company; attorney, partner,
Wyche, Burgess, Freeman & Parham, P.A.

Robert E. Hamby Jr. 1
Senior Vice President -- Finance and Administration,
and Chief Financial Officer, Multimedia, Inc.

John T. LaMacchia 3, 5
President and Chief Executive Officer, Cincinnati Bell Inc.

Leslie G. McCraw 2, 5
Chairman of the Board and Chief Executive Officer,
Fluor Corporation

Dorothy P. Ramsaur 4, 5
Private investments

Donald D. Sbarra
Senior Vice President -- Operations, Multimedia, Inc.

Elizabeth P. Stall 3, 4, 5, 6
Private investments

William C. Stutt 2, 3, 5, 6
Limited partner, Goldman Sachs Group, L.P.

1. Executive Committee
2. Audit Committee
3. Compensation Committee
4. Employee Benefits Committee
5. Stock Option Committee
6. Nominating Committee (appointed 10-27-93)

<PAGE>

Multimedia, Inc. and Subsidiaries

Multimedia Newspaper Company
305 S. Main St.
P.O. Box 1688
Greenville, SC 29602

Alabama
Daily and Sunday:
The Montgomery Advertiser
Non-dailies:
Alabama Outdoor
The Autauga Times
Health Monthly
East Montgomery Weekly
The Prattville Progress
Community Press -- Millbrook

Arkansas
Daily:
The Baxter Bulletin
Midweek
(Mountain Home)
Non-daily:
Twin Lakes Shopper
(Mountain Home)

Georgia
Daily:
The Moultrie Observer
Non-daily:
Weekly Moultrie Observer

North Carolina
Daily and Sunday:
Asheville Citizen-Times
Non-dailies:
Five zoned weekly
"Neighbors"

Ohio
Dailies:
Gallipolis Daily Tribune
The Daily Sentinel
(Pomeroy)
Sunday:
Sunday Times-Sentinel
(Gallipolis)
Non-daily:
The Tri-County News
(Gallipolis)

South Carolina
Dailies:
The Greenville News
Greenville Piedmont
Sunday:
The Greenville News
Non-dailies:
The Tribune-Times
(Fountain Inn)
The Poinsett Register
Three zoned weekly "Extras"
(Greenville)
Fort Jackson Leader
(Columbia)

Tennessee
Daily:
The Leaf-Chronicle
(Clarksville)
Non-dailies:
The Ashland City Times
The Dickson Herald
The Nashville Record
The Stewart-Houston Times
(Dover-Erin)
The News-Examiner
(Gallatin)
Clarksville Money-Saver
The Sumner County Shopper
(Gallatin)
The Shopper's Fair
(Dickson)
The Star News
(Hendersonville)
Cheatham County
Money-Saver
Robertson County Times
Monthly:
Music City News
The Gospel Voice
(Nashville)
Television Productions --
TNN Music City News
Country Awards
Music City News
Country Songwriters Awards

Virginia
Daily and Sunday:
The Daily News-Leader
Non-daily:
Spotlight
(Staunton)

West Virginia
Daily:
Point Pleasant Register

Multimedia Broadcasting
Company
140 W. Ninth St.
Cincinnati, OH 45202
Television

Georgia
Macon: WMAZ-TV (CBS)

Missouri
St. Louis: KSDK (NBC)

Ohio
Cincinnati: WLWT (NBC)
Cleveland: WKYC (NBC)

Tennessee
Knoxville: WBIR-TV (NBC)
Radio

Georgia
Macon: WAYS(FM)
WMAZ-AM

Louisiana
Shreveport: KEEL-AM*
KITT (FM)*

South Carolina
Greenville: WFBC-AM/(FM)
Spartanburg: WORD-AM

Wisconsin
Milwaukee: WEZW(FM)*

Multimedia Entertainment
Company

45 Rockefeller Plaza
35th Floor
New York, NY 10111

Donahue / Sally Jessy Raphael /
Pozner & Donahue / Jerry Springer /
Rush Limbaugh, The Television Show

Multimedia Motion Pictures

Multimedia Cablevision
Company

701 E. Douglas Ave.
P.O. Box 3027
Wichita, KS 67202

Multimedia operates more than 125 cable television franchises in
Kansas, Illinois, Indiana, North Carolina and Oklahoma and serves
approximately 417,300 basic subscribers.

Multimedia Security Service

701 E. Douglas Ave.
P.O. Box 3027
Wichita, KS 67202
Multimedia serves more than 52,000 security alarm customers.*

Divested in early 1994.

<PAGE>

Multimedia, Inc. and Subsidiaries

Shareholder Information

Corporate Headquarters
Multimedia, Inc.
305 S. Main Street
Greenville, SC 29601
Mailing Address:
P.O. Box 1688
Greenville, SC 29602

Investor Information
Requests for the Form 10-K for the year ended
December 31, 1993, and other financial information
should be directed to the Vice President of Investor Relations at the
above address, or telephone
(803) 298-4819.

Annual Meeting
The annual meeting of shareholders will be held at
2:00 p.m. on Wednesday, April 20, 1994, in the Dorothy Gunter
Theatre, Peace Center for the Performing Arts, 300 South Main
Street, Greenville, SC. All shareholders are cordially invited to attend.

Auditors
KPMG Peat Marwick
Greenville, SC

Stock Transfer Agent and Registrar
Wachovia National Bank of North Carolina, N.A.
Corporate Trust Department
P.O. Box 3001
Winston-Salem, NC 27102
1-800-633-4236

Common Stock
Multimedia's common stock is listed on the NASDAQ National Market
System. The market symbol is MMEDC. Authorized 100,000,000
shares; outstanding at year-end, 37,209,609 shares. On December 31,
1993, there were 1,277 shareholders of record. The CUSIP number
for the common stock is 62545K 10 7. See page one for stock price
history information.
No dividends were declared or paid during 1992 or 1993.

(Recycled symbol appears here)
Multimedia, Inc. encourages the principle of recycling and advocates
the use of recycled newsprint in the production of its publications.
The 1993 Annual Report is printed entirely on recycled papers.

<PAGE>

(Multimedia, Inc. logo appears here)
MULTIMEDIA, INC., P.O. Box 1688, Greenville, South Carolina 29602
(803) 298-4373

**************************************************************************
APPENDIX

On the Annual Report Cover the Multimedia, Inc. logo appears where noted.

The page before page 1 is a full page photo.

On Page 1 there are three bar graphs that appear where noted.
The plot points are as follows:

Operating Revenues
(in thousands)
1993 1992 1991
$634,574 $576,781 $524,326

Net Earnings
(in thousands)
1993 1992 1991
$99,850 $60,504 $48,397

Earnings Per Share
1993 1992 1991
$2.60 $1.61 $1.30

On Page 2 there is a bar graph that appear where noted.
The plot points are as follows:
Operating Profit
(in thousands)
1993 1992 1991
$184,403 $173,105 $155,806

On Page 4 there are two pie graphs that appear where noted.
The plot points are as follows:

Operating Revenues
Entertainment 25%
Newspapers 21%
Cable 26%
Broadcasting 25%
Security 3%

Operating Profit
Entertainment 32%
Newspapers 19%
Cable 29%
Broadcasting 19%
Security 1%

On Page 3 two photos appear on the right-hand side of the page.
One photo is of Walter E. Bartlett, Chairman of the Board, President
and Chief Executive Officer. The next photo is of Donald D. Sbarra,
Senior Vice President-Operations.

On Page 4 a photo of Walter Bartlett and Bob Hamby appears in the
bottom right-hand column.

On Page 5 the signature of Walter E. Bartlett appears where indicated.

On Page 6 a photo of Laura Biggerstaff presenting Bob Greiner a map
appears in the upper right-hand column of the page. A photo of
John Pittman, Bern Mebane, Cecil Kelly and Hal Tanner appears at the
bottom half of the page.

On Page 7 a photo of John Harden, Jay Banks, Steve Brandt and Tom
Stultz appears in the middle right-hand column.

On Page 8 a photo of Tina Hicks and Dodie Cantrell appears in the
bottom left-hand column. Also a photo of Pat Servodidio, Karen Foss
and Rick Edlund appears in the top right-hand column on the page.

On Page 9 a photo of Bill Landry, Linda Billman, Jim Hart, Steve
Dean, Bill ARcher and Doug Mills appears at the bottom of the page.

On Page 10, there is a photo of Bob Turner and Dick Coveny in the
upper left-hand column.

On Page 11 four photos appear in the middle of the page, one each of
Phil Donahue, Sally Jessy Raphael, Rush Limbaugh and Jerry Springer.

On Page 12 a photo of Stacy Hernandez and Debbie Spillman appears
in the upper right-hand column on the page. A photo of Ron Marnell,
Cliff Waggoner, Terry Goruch and Bruce Mears appears on the bottom
of the page.

On Page 13 a photo of Phil Ford delivering a motivational talk to
a group of young people appears in the middle right-hand column on
the page.

On Page 14 a photo of Mark Wilson, A.J. Jones, and Phil Davis
appears in the upper right-hand corner of the page. A photo of
Patsy Selby, Mike Burrus and David Fleming appears at the bottom
of the page.

On Page 15 a photo of Joel Johnson and Randy Rosiere appears
in the left-hand column on the page.

On Page 16 a photo of Bob Hamby appears in the left-hand column on
the page.

On Page 23 a photo of Clyde Baucom, Claudia Price, Tom Magaha, and
Alan Austin appears at the bottom, left-hand column of the page.

On Page 42 a signature of KPMG Peat Marwick appears where noted.

On Page 46 there is a recycled symbol that appears at the
bottom of the page where noted.

On the back cover the Multimedia, Inc. logo appears where indicated.

Exhibit 21
Multimedia, Inc.
Subsidiaries of the Registrant

Name of State of Names under which
Corporation Incorporation does business

Multimedia, Inc. SC Staunton News-Leader
(the Registrant) Spotlight
The Moultrie Observer
The Headliner
Weekly Moultrie Observer
WFBC-AM/FM
WMAZ-AM/WAYS-FM
Clemson Sports Network
WORD-AM
Multimedia WBIR, Inc. SC WBIR TV
Multimedia WMAZ, Inc. SC WMAZ TV
Multimedia KSDK, Inc. SC KSDK TV
WKYC Holdings, Inc. (51% DE
owned by the Registrant)
WKYC-TV, Inc. DE WKYC TV
Multimedia Publishing of
South Carolina, Inc. SC Greenville News
Greenville Piedmont
The Paper
The Poinsett Register
Food Extra (TMC)
The Tribune-Times
The Golden Strip Times (TMC)
The New Home Buyers Guide
The Exchange
The Employment Guide
Anderson Real Estate Guide
Multimedia Publishing of
North Carolina, Inc. SC Asheville Citizen-Times
Employment Guide
The Real Estate/Home Buyers
Guide

The Advertiser Company AL Montgomery Advertiser
Real Estate Guide
Wheels
Montgomery This Week
Progress II (TMC)

<PAGE>
Exhibit 21
(Continued)
Multimedia, Inc.
Subsidiaries of the Registrant

Name of State of Names under which
Corporation Incorporation does business

Service Engraving Company,
Inc. AL Autauga Times
The Prattville Progress

Leaf Chronicle Company TN Clarksville Leaf-Chronicle
The Ashland City Times
Cheatham County Money-Saver
Clarksville Money-Saver
The Dickson Herald
The Shopper's Fair
The Nashville Record
The Stewart-Houston Times
The Star News
Robertson County Times
Sumner Times, Inc. TN The News-Examiner
The Sumner County Shopper
Music City News
Publishing Co., Inc. TN Music City News
The Gospel Voice
Baxter County Newspapers, Inc. AR Baxter Bulletin
Twin Lakes Shopper
The Ohio Valley Publishing
Company OH Gallipolis Daily Tribune
The Daily Sentinel
The Tri-County News
Point Pleasant Register Company WV Point Pleasant Register

Multimedia Entertainment, Inc. SC WLWT TV
Multimedia Entertainment
Company
Multimedia Programs, Inc. OH
Multimedia of Cincinnati, Inc. OH
Multimedia Motion Pictures, Inc. SC
Multimedia Films, Inc. SC
Multimedia Specials, Inc. SC
MPPI, Inc. SC MPPI of South Carolina, Inc.

Multimedia Cablevision, Inc. SC Multimedia Security Service

<PAGE>
Exhibit 21
(Continued)
Multimedia, Inc.
Subsidiaries of the Registrant

Name of State of Names under which
Corporation Incorporation does business

Medicine Lodge CATV, Inc. KS
Red Carpet Cable, Inc. OK
Multimedia Security
Service, Inc. SC

AirCapital Cablevision, Inc. KS
Multimedia Cablevision of
Oak Lawn, Inc. IL
Multimedia Cablevision of
Oak Forest, Inc. IL
Multimedia Cablevision of
Batavia, Inc. IL
Multimedia Cablevision of
Evergreen Park, Inc. IL
Multimedia Cablevision of
Hometown, Inc. IL
Multimedia Cablevision of
Lisle, Inc. IL
Multimedia Cablevision of
Markham, Inc. IL
Multimedia Cablevision of
Chicago Ridge, Inc. IL
Multimedia Cablevision of
Harvey, Inc. IL
Multimedia Cablevision of
Phoenix, Inc. IL
Multimedia Cablevision of
Alsip, Inc. IL
Multimedia Cablevision of
Illinois, Inc. IL
Multimedia Cablevision of
South Holland, Inc. IL
Multimedia Cablevision Leasing
Co., Inc. IL
Multimedia Cablevision of
Villa Park, Inc. IL
<PAGE>
Exhibit 21
(Continued)
Multimedia, Inc.
Subsidiaries of the Registrant

Name of State of Names under which
Corporation Incorporation does business

Tar River Communications, Inc. NC Tar River Cable TV
New Bern Cable TV
Greenville Cable TV
Kinston Cable TV
Clinton Cable TV
Valparaiso Cable TV
LaPorte Cable TV
Multimedia Cablevision of
Midwest City, Inc. OK

Multimedia Talk Television, Inc. SC
Multimedia Development, Inc. SC
Teleproductions Corporation SC
Between Friends, Inc. SC
Dazzle, Inc. SC South Carolina Dazzle, Inc.
Visions, Inc. SC Donato Productions
Conspiracy Productions, Inc. SC
MOW Productions, Inc. SC
Multimedia Enterprise, Inc. SC
Multimedia Telecommuni-
cations, Inc. SC

Exhibit 23

CONSENT TO USE OF REPORTS

The Board of Directors and Stockholders
Multimedia, Inc.:

We consent to incorporation by reference in the Registration
Statements No. 2-68069, 33-17234, 33-40050, 33-40253, 33-61574, and
33-61462 on Forms S-8 and the Registration Statements No. 33-42179
and 33-46557 on Forms S-3 of Multimedia, Inc. of our reports dated
February 11, 1994, relating to the consolidated balance sheets of
Multimedia, Inc. and subsidiaries as of December 31, 1993 and 1992
and the related consolidated statements of earnings, stockholders'
equity (deficit) and cash flows and related schedules for each of
the years in the three-year period ended December 31, 1993 which
reports appear in the December 31, 1993 annual report on Form 10-K
of Multimedia, Inc.

(Signature of KPMG Peat Marwick appears here)

Greenville, South Carolina
March 25, 1994

(Multimedia, Inc. logo appears here)
MULTIMEDIA, INC.
305 SOUTH MAIN STREET
P.O. BOX 1688
GREENVILLE, SOUTH CAROLINA 29602
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 20, 1994
TO OUR SHAREHOLDERS:
You are cordially invited to the Annual Meeting of Shareholders of
Multimedia, Inc. to be held at 2:00 P.M. on Wednesday, April 20, 1994, at the
Dorothy Gunter Theatre, Peace Center for the Performing Arts at 300 South Main
Street in Greenville, South Carolina for the purpose of considering and acting
upon the following:
1. The election of twelve directors to serve until the next annual meeting
of shareholders or until their successors have been duly elected and
qualified.
2. The ratification of the appointment of KPMG Peat Marwick as independent
auditors of the Company for 1994.
3. The transaction of such other matters as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on March 3, 1994, as
the record date for the determination of shareholders entitled to notice of and
to vote at the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
David L. Freeman, SECRETARY
Greenville, South Carolina
March 15, 1994
A FORM OF PROXY IS ENCLOSED. TO ENSURE THAT YOUR SHARES WILL BE VOTED AT
THE ANNUAL MEETING, YOU ARE REQUESTED TO COMPLETE AND SIGN THE ENCLOSED PROXY
AND RETURN IT PROMPTLY IN THE ENCLOSED, POSTAGE PAID, ADDRESSED ENVELOPE. NO
ADDITIONAL POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. THE GIVING OF A
PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN THE EVENT YOU ATTEND THE MEETING.

<PAGE>
[This page left blank intentionally]

<PAGE>
MULTIMEDIA, INC.
305 SOUTH MAIN STREET
POST OFFICE BOX 1688
GREENVILLE, SOUTH CAROLINA 29602
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
APRIL 20, 1994
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Multimedia, Inc. (the Company) to be voted
at the Annual Meeting of Shareholders of the Company to be held at 2:00 P.M., on
Wednesday, April 20, 1994, at the Dorothy Gunter Theatre, Peace Center for the
Performing Arts at 300 South Main Street, in Greenville, South Carolina. The
approximate date of mailing this Proxy Statement and the accompanying proxy is
March 15, 1994.
Only shareholders of record at the close of business on March 3, 1994, are
entitled to notice of and to vote at the meeting. As of such date, there were
outstanding 37,274,978 shares of Common Stock, $.10 par value per share (the
only voting securities), of the Company. Each share is entitled to one vote.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by (i)
delivering to the Secretary of the Company, at or before the Annual Meeting, a
written notice of revocation bearing a later date than the proxy, (ii) duly
executing a subsequent proxy relating to the same shares and delivering it to
the Secretary of the Company at or before the Annual Meeting or (iii) attending
the Annual Meeting and giving notice of revocation to the Secretary of the
Company or in open meeting prior to the proxy being voted (although attendance
at the Annual Meeting will not in and of itself constitute a revocation of a
proxy). Any written notice revoking a proxy should be sent to: Multimedia, Inc.,
305 South Main Street, Post Office Box 1688, Greenville, South Carolina 29602,
Attention: Secretary.
All shares represented by valid proxies received pursuant to the
solicitation and prior to voting at the meeting and not revoked before they are
exercised will be voted, and, if a choice is specified with respect to any
matter to be acted upon, the shares will be voted in accordance with such
specification.
1

<PAGE>
ELECTION OF DIRECTORS
The By-laws of the Company provide that the number of Directors to be
elected at any meeting of shareholders shall be determined by the Board of
Directors. The Board has determined that twelve Directors shall be elected at
the Annual Meeting.
The following twelve persons are nominees for election as Directors at the
meeting to serve until the next annual meeting of shareholders of the Company or
until their successors are duly elected and qualified. Unless authority to vote
at the election of Directors is withheld, it is the intention of the persons
named in the enclosed form of proxy to nominate and vote for the persons named
below all of whom, other than M. Dexter Hagy, are currently Directors of the
Company. Except as otherwise noted below, the business address of each nominee
is Multimedia, Inc., 305 South Main Street, Greenville, S.C. 29601. Each such
person is a citizen of the United States. There are no family relationships
among the directors and the executive officers of the Company, except for Mrs.
Ramsaur and Mrs. Stall who are cousins.
The Company believes that all of the nominees will be available and able to
serve as Directors, but in the event any nominee is not available or able to
serve, the shares represented by the proxies will be voted for such substitute
as shall be designated by the Board of Directors.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY
DIRECTOR OWNED (% OF
NAME AND AGE PRINCIPAL OCCUPATION SINCE OUTSTANDING) (20)
<S> <C> <C> <C>
Walter E. Bartlett Chairman of the Board, Chief 1978 415,095 (1.11%)
(66) Executive Officer and President of
the Company (1)(13)
George H. V. Cecil Chairman of Biltmore Dairy Farms, 1975 20,000 (*)
(69) Inc., P.O. Box 5355, Asheville,
North Carolina 28813 (Real Estate
Development and Investments)
(2)(15)(17)
Rhea T. Eskew Consultant to the Company, 1979 18,800 (*)
(70) 400 Huntington Road
Greenville, South Carolina 29615
(3)(16)(17)
David L. Freeman Secretary of the Company and a 1984 76,400 (*)
(69) member of the law firm of Wyche,
Burgess, Freeman & Parham, P.A., 44
E. Camperdown Way, Greenville, South
Carolina 29601 (4)(13)(14)(18)
M. Dexter Hagy President of Vaxa Corporation, -- 2,000 (*)
(49) Nations Bank Plaza, Suite 606,
Greenville, South Carolina 29601
(Investment Holding Company) (5)
Robert E. Hamby, Jr. Senior Vice President Finance and 1990 127,231 (*)
(47) Administration and Chief Financial
Officer of the Company (6)(13)
</TABLE>
2

<PAGE>
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY
DIRECTOR OWNED (% OF
NAME AND AGE PRINCIPAL OCCUPATION SINCE OUTSTANDING) (20)
<S> <C> <C> <C>
John T. LaMacchia President and Chief Executive 1989 5,600 (*)
(52) Officer and Director of Cincinnati
Bell Inc., 201 East 4th Street
Cincinnati, Ohio 45202 (Telephone
Company) (7)(14)(17)
Leslie G. McCraw Chairman of the Board and Chief 1990 5,600 (*)
(59) Executive Officer of Fluor
Corporation, 3333 Michelson Drive,
Irvine, California 92730
(Engineering and Construction)
(8)(15)(17)
Dorothy P. Ramsaur Homemaker active in the supervision 1986 1,565,822 (4.20%)
(67) of personal and family investments,
1 Rockingham Rd., Greenville, South
Carolina 29607 (9)(16)(17)
Donald D. Sbarra Senior Vice President of Operations 1988 200 (*)
(63) of the Company (10)
Elizabeth P. Stall Homemaker active in civic affairs 1986 63,982 (*)
(62) and in the supervision of personal
and family investments, 11 Sirrine
Drive, Greenville, South Carolina
29605 (11)(14)(16)(17)(18)
William C. Stutt Limited Partner of Goldman Sachs 1981 27,000 (*)
(66) Group, L.P., 85 Broad Street, New
York, New York 10004 (Investment
Banking) (12)(14)(15)(17)(18)
All Directors and Executive 2,601,356 (6.87%)(19)
Officers as a Group (16 persons)
</TABLE>
(*) Less than 1%.
(1) Mr. Bartlett was elected Chairman of the Board in October 1989. Mr.
Bartlett was elected Chief Executive Officer and President of the Company
in December 1993. He served as Chief Executive Officer from December 1984
to April 1993. He served as President and Chief Executive Officer from
December 1984 to December 1989 and from October 1990 to April 1992. The
number of shares shown as beneficially owned by Mr. Bartlett includes
200,000 shares covered by options.
(2) Mr. Cecil is a Director of Carolina Power & Light Co. The number of shares
shown as beneficially owned by Mr. Cecil includes 5,000 shares covered by
an option, pursuant to the Director Stock Option Plan.
(3) Mr. Eskew elected to retire from the Company in December 1989. Prior to his
retirement, Mr. Eskew served as Senior Executive of Multimedia Newspaper
Company from December
3

<PAGE>
1984. The number of shares shown as beneficially owned by Mr. Eskew
includes 5,000 shares covered by an option, pursuant to the Director Stock
Option Plan.
(4) Mr. Freeman was elected Secretary of the Company in April 1990. He served
as Assistant Secretary of the Company from April 1982 to April 1990. Mr.
Freeman is a member of the law firm of Wyche, Burgess, Freeman & Parham,
P.A., general counsel to the Company. The number of shares shown as
beneficially owned by Mr. Freeman includes 1,400 shares covered by options,
but does not include 10,600 shares covered by options, which excluded
options become exercisable more than 60 days after the date of this Proxy
Statement.
(5) Mr. Hagy is a Director of Carolina First Corporation.
(6) Mr. Hamby was elected Senior Vice President Finance and Administration and
Chief Financial Officer in October 1993. He served as Treasurer and Chief
Financial Officer from October 1987 to October 1993. Mr. Hamby is a
Director of Carolina First Corporation. The number of shares shown as
beneficially owned by Mr. Hamby includes 109,000 shares covered by options,
but does not include 51,000 shares covered by options, which excluded
options become exercisable more than 60 days after the date of this Proxy
Statement. The number of shares shown as beneficially owned by Mr. Hamby
also includes 1,543 shares held by the Company's Thrift Plan of which Mr.
Hamby may be deemed a beneficial owner and 5,700 shares owned by his wife
as custodian for his sons, as to which shares owned by his wife he
disclaims beneficial ownership.
(7) Mr. LaMacchia is a Director of the Kroger Co. The number of shares shown as
beneficially owned by Mr. LaMacchia includes 5,000 shares covered by an
option, pursuant to the Director Stock Option Plan.
(8) Mr. McCraw is a Director of Allergan, Inc. The number of shares shown as
beneficially owned by Mr. McCraw includes 5,000 shares covered by an
option, pursuant to the Director Stock Option Plan.
(9) The number of shares shown as beneficially owned by Mrs. Ramsaur includes
1,244,247 shares held by her as trustee under the will of Roger Peace. The
number of shares shown as beneficially owned by Mrs. Ramsaur includes 5,000
shares covered by an option, pursuant to the Director Stock Option Plan.
(10) Mr. Sbarra was elected Senior Vice President of Operations of the Company
in December 1993 and Senior Vice President of the Company in October 1987.
He served as Chairman of Multimedia Cablevision Company from April 1993 to
December 1993 and President of Multimedia Cablevision Company from October
1987 to April 1993.
(11) Mrs. Stall is a Director of Carolina First Corporation. The number of
shares shown as beneficially owned by Mrs. Stall includes 750 shares owned
by her husband, of which shares she disclaims beneficial ownership. The
number of shares shown as beneficially owned by
4

<PAGE>
Mrs. Stall includes 5,000 shares covered by an option, pursuant to the
Director Stock Option Plan.
(12) The Goldman Sachs Group, L.P., of which Mr. Stutt is a limited partner, is
the 99% general partner of Goldman, Sachs & Co. The number of shares shown
as beneficially owned by Mr. Stutt includes 1,400 shares owned by his wife
(individually or as custodian for a child), of which he disclaims
beneficial ownership and 300 shares owned by his daughter and son-in-law,
as to which shares he has investment power but disclaims beneficial
ownership and 300 shares owned by his stepson, of which he disclaims
beneficial ownership. The number of shares shown as beneficially owned by
Mr. Stutt includes 5,000 shares covered by an option, pursuant to the
Director Stock Option Plan.
(13) Member of the Executive Committee.
(14) Member of the Compensation Committee.
(15) Member of the Audit Committee.
(16) Member of the Employee Benefits Committee.
(17) Member of the Stock Option Committee.
(18) Member of the Nominating Committee.
(19) Includes an aggregate 593,100 of shares covered by options which are or may
become exercisable within 60 days, and includes 9,163 shares held by the
Company's Thrift Plan of which an executive officer may be deemed a
beneficial owner and excludes an aggregate of 329,000 shares covered by
options not exercisable within 60 days by executive officers.
(20) Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the Exchange Act), shares are deemed beneficially owned if the
named person has the right to acquire ownership of such shares within 60
days. Percentages are computed on the assumption that unissued shares so
subject to acquisition upon the exercise of options by a given person or
group are outstanding, but no other such shares similarly subject to
acquisition by other persons are outstanding.
5

<PAGE>
The Board of Directors met six times during the year ended December 31,
1993. The Audit Committee met with representatives of KPMG Peat Marwick two
times during 1993 for the purpose of reviewing the firm's scope and results of
audit. The Compensation Committee met twice in 1993 for the purpose of
submitting to the Board of Directors suggested officers' salaries for the
ensuing year, incentive bonus plans and other non-stock compensation. The Stock
Option Committee met once in 1993 for the purpose of granting options for the
Company's common stock to the Company's executive officers and employees. The
Employee Benefits Committee met twice in 1993 for the purpose of reviewing new
and amended employee benefit programs and personnel policies. The Nominating
Committee, which was established in October 1993 and did not meet in 1993,
recommends to the Board nominees for election as directors. Recommendations from
shareholders will be considered by the Nominating Committee and should be sent
to the attention of the Company's Secretary at the Company's address. All
Directors attended at least 75 percent of the meetings of the Board and
Committees on which such Directors serve.
PRINCIPAL SHAREHOLDERS OF THE COMPANY
As of December 31, 1993, to the extent known to the Company and based on
information provided by the following persons, the following provides certain
information as to the persons or groups who were the only beneficial owners of
5% or more of the outstanding shares.
<TABLE>
<CAPTION>
NUMBER OF
NAME & ADDRESS SHARES PERCENT
OF BENEFICIAL BENEFICIALLY OF TOTAL
OWNER OWNED OUTSTANDING
<S> <C> <C>
The Equitable Companies Incorporated 3,553,775 9.55%
787 Seventh Avenue
New York, New York 10019 (1)
Heine Securities Corporation
Michael F. Price 1,974,600 5.31%
51 John F. Kennedy Parkway
Short Hills, New Jersey 07078 (2)
Wachovia Corporation, as trustee 2,038,605 5.48%
301 North Main Street
Winston-Salem, North Carolina 27150 (3)
Wellington Management Company 3,260,905 8.76%
75 State Street
Boston, Massachusetts 02109 (4)
</TABLE>
(1) The number of shares shown as beneficially owned by The Equitable Companies
Incorporated (Equitable) is based on information provided as of December 31,
1993 and includes 3,466,775 shares held by Equitable's subsidiary, Alliance
Capital Management, L.P., on
6

<PAGE>
behalf of client discretionary investment advisory accounts, and 87,000
shares held by Equitable's subsidiary, The Equitable Life Assurance Society
of the United States. With respect to these shares, Equitable's subsidiaries
have sole voting power with respect to 2,564,930 shares, have shared voting
power with respect to 87,000 shares, and have sole investment power with
respect to 3,553,775 shares.
(2) The number of shares shown as beneficially owned by Heine Securities
Corporation (HSC) is based on information provided as of December 31, 1993.
One or more of HSC's advisory clients is the legal owner of 1,974,600
shares. Pursuant to investment advisory agreements with its advisory
clients, HSC has sole investment discretion and voting authority with
respect to such 1,974,600 shares. Michael F. Price is President of HSC, in
which capacity he exercises voting control and dispositive power over the
same shares. Mr. Price disclaims beneficial ownership of the shares
beneficially owned by HSC.
(3) The number of shares shown as beneficially owned by Wachovia Corporation, as
trustee is based on information provided as of December 31, 1993 and
includes 1,988,080 shares held by its subsidiary The South Carolina National
Bank, as trustee. With respect to these shares, Wachovia or its subsidiary
has sole voting power with respect to 1,158,101 shares, shared voting power
with respect to 55,857 shares, sole investment power with respect to
1,864,766 shares and shared investment power with respect to 113,089 shares.
(4) The number of shares shown as beneficially owned by Wellington Management
Company (WMC) is based on information provided as of December 31, 1993.
These shares are owned by various investment advisory clients of WMC or its
subsidiary, Wellington Trust Company, National Association. Pursuant to
investment advisory agreements with such clients, WMC or its subsidiary has
shared voting power with respect to 1,700,430 shares and shared dispositive
power with respect to all 3,260,905 shares.
7

<PAGE>
EXECUTIVE OFFICERS
The following provides certain information regarding the executive officers
of the Company who are appointed by and serve at the pleasure of the Board:
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY
OWNED (% OF
NAME AND AGE POSITION OUTSTANDING)(6)
<S> <C> <C>
Walter E. Bartlett (66) Chairman of the Board, Chief Executive Officer 415,095 (1.11%)
and President of the Company (1)
Michael C. Burrus (39) Vice President of the Company and President of 41,900 (*)
Multimedia Cablevision Company (2)
David L. Freeman (69) Secretary of the Company (1) 76,400 (*)
Robert E. Hamby, Jr. (47) Senior Vice President Finance and Adminis- 127,231 (*)
tration and Chief Financial Officer of the
Company (1)
William deB. Mebane (45) Vice President of the Company and President of 67,578 (*)
Multimedia Newspaper Company (3)
Donald D. Sbarra (63) Senior Vice President of Operations of the 200 (*)
Company (1)
Pat A. Servodidio (56) Vice President of the Company and President of 55,400 (*)
Multimedia Broadcasting Company (4)
Robert L. Turner (52) Vice President of the Company and President of 108,748 (*)
Multimedia Entertainment Company (5)
</TABLE>

(*) Less than 1%.
(1) See information under ELECTION OF DIRECTORS.
(2) Mr. Burrus joined the Company in 1981 and was named Vice President of the
Company and President of Multimedia Cablevision Company in April 1993. He
served as Executive Vice President of Multimedia Cablevision Company from
March 1992 until April 1993. He served as Vice President of Operations and
Finance of Multimedia Cablevision Company from February 1985 until March
1992. The number of shares shown as beneficially owned by Mr. Burrus
includes 41,900 shares covered by options, but does not include 84,200
shares covered by options, which excluded options become exercisable more
than 60 days after the date of this Proxy Statement. Mr. Burrus failed to
file a Form 4, but filed a Form 5, under the Exchange Act with respect to a
1993 disposition of shares held for his account in the Company's Thrift
Plan.
(3) Mr. Mebane was elected Vice President of the Company and President of
Multimedia Newspaper Company in March 1989. From December 1983 to March
1993, he served from time to time as Publisher of the Greenville News and
the Greenville Piedmont. He served as Vice President of Multimedia Newspaper
Company from June 1985 to February 1989. The number
8

<PAGE>
of shares shown as beneficially owned by Mr. Mebane includes 41,800 shares
covered by options, but does not include 41,200 shares covered by options,
which excluded options become exercisable more than 60 days after the date
of this Proxy Statement. The number of shares shown as beneficially owned by
Mr. Mebane also includes 606 shares held for him in an IRA account and 7,472
shares held by the Company's Thrift Plan of which Mr. Mebane may be deemed a
beneficial owner.
(4) Mr. Servodidio was elected Vice President of the Company and President of
Multimedia Broadcasting Company in April 1992. He served as Vice
President/General Manager of WKYC-TV (majority owned by the Company) from
June 1991 until April 1992. Mr. Servodidio was President of RKO General (a
broadcasting company) from 1987 to 1991. The number of shares shown as
beneficially owned by Mr. Servodidio includes 55,400 shares covered by
options, but does not include 97,600 shares covered by options, which
excluded options become exercisable more than 60 days after the date of this
Proxy Statement.
(5) Mr. Turner joined the Company and was named President of Multimedia
Entertainment Company in February 1991 and was elected Vice President of the
Company in April 1991. Mr. Turner was President and Chief Executive Officer
of Orbis Communications, Inc. (a syndicated program and television movie
business) from February 1984 until February 1991. The number of shares shown
as beneficially owned by Mr. Turner includes 108,600 shares covered by
options, but does not include 44,400 shares covered by options, which
excluded options become exercisable more than 60 days after the date of this
Proxy Statement. The number of shares shown as beneficially owned by Mr.
Turner also includes 148 shares held by the Company's Thrift Plan of which
Mr. Turner may be deemed a beneficial owner.
(6) See Note (20) to the table under ELECTION OF DIRECTORS.
9

<PAGE>
MANAGEMENT COMPENSATION
The following table sets forth certain information respecting the
compensation of each individual who served as the Chief Executive Officer of the
Company during 1993, and the four other most highly compensated executive
officers of the Company in 1993, for the fiscal years ended December 31, 1993,
1992 and 1991.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
SECURITIES
ANNUAL COMPENSATION (1) UNDERLYING
NAME AND OPTIONS ALL OTHER
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) (POUND) COMPENSATION ($)
<S> <C> <C> <C> <C> <C>
Walter E. Bartlett 1993 $533,676 $ 236,000 -- $ 4,444(2)
Chairman, President and CEO 1992 528,244 325,000 -- 2,739(2)
1991 484,200 130,000 -- 4,474(2)
J. William Grimes 1993 460,735 None 100,000 757,798(3)
President and CEO 1992 408,404 281,308 25,000 19,410(3)
1991 97,947 300,000 105,000 5,155(3)
Robert L. Turner 1993 383,776 169,725 -- 4,717(2)
President MEC 1992 371,710 213,150 18,000 4,468(2)
1991 288,852 138,125 120,000 --
Robert E. Hamby, Jr. 1993 298,680 164,691 -- 4,859(2)
Senior VP Finance and CFO 1992 283,680 182,023 20,000 4,644(2)
1991 258,680 62,500 30,000 4,485(2)
Donald D. Sbarra 1993 323,680 125,000 -- 5,622(2)
Senior VP-Operations 1992 323,680 187,961 -- 5,609(2)
1991 308,680 120,400 -- 5,401(2)
William deB. Mebane 1993 273,680 96,195 -- 4,761(2)
President MNC 1992 260,680 165,236 14,000 4,531(2)
1991 248,680 40,000 30,000 4,512(2)
</TABLE>

(1) The Company pays for various perquisites such as club memberships for
executive officers and certain other employees. Such club memberships may
have been used for personal reasons on occasion. However, the Company has
made reasonable inquiry and has concluded that the aggregate amounts of such
and other personal benefits do not, in any event, exceed $50,000 or 10% of
the salary and bonus as to each person.
(2) Amounts contributed by the Company under the Company's Thrift Plan, except
that the amounts shown for Mr. Sbarra also include $1,100 each year for life
insurance that will provide a death benefit of $88,417 payable to his
beneficiary in the event of his death.
10

<PAGE>
(3) The 1993 amount for Mr. Grimes includes $700,000 in severance payments,
$46,929 in moving related expenses, $5,914 in imputed interest related to
the loans from the Company described below and $4,955 in amounts contributed
by the Company under the Company's Thrift Plan. Of the $700,000 in severance
payments, $237,250 was paid in 1993 with the balance to be paid in 1994. The
1992 and 1991 amounts include $17,430 and $5,155, respectively, for imputed
interest related to the loans from the Company as described below. The 1992
amount also includes $1,980 contributed by the Company under the Company's
Thrift Plan.
OPTION GRANTS IN THE LAST FISCAL YEAR
The following table sets forth the options granted in 1993 to the named
executive officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS
OPTIONS GRANTED GRANT DATE
GRANTED TO EMPLOYEES EXERCISE EXPIRATION PRESENT
(POUND) IN FISCAL YEAR PRICE ($/SH)(1) DATE VALUE ($)
<S> <C> <C> <C> <C> <C>
Walter E. Bartlett None -- -- -- --
J. William Grimes 100,000 66.7% $ 35.00 4/20/03(2) $1,956,000(3)
Robert L. Turner None -- -- -- --
Robert E. Hamby, Jr. None -- -- -- --
Donald D. Sbarra None -- -- -- --
William deB. Mebane None -- -- -- --
</TABLE>

(1) The exercise price of the options granted was the fair market value of the
Company's common stock on the date of grant.
(2) Each option was to become exercisable for 20% of the shares covered thereby
on December 31, 1993 and for an additional 20% of the shares covered thereby
on each anniversary thereof. All of these options granted to Mr. Grimes were
forfeited upon his resignation in December 1993 as an officer and director
of the Company.
(3) The present value determination was made using the Black-Scholes option
pricing model. The following assumptions were used in the Black-Scholes
option pricing model: expected volatility of .3092, expected risk-free rate
of return of 5.84%, dividend yield of 0%, expected exercise period of 10
years and no adjustments for nontransferability or risk of forfeiture.
11

<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND
FISCAL YEAR-END OPTION VALUES
The following table sets forth information on option exercises during 1993
by the named executive officers and the value of such officers' unexercised
options at December 31, 1993.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY
ACQUIRED ON OPTIONS OPTIONS
EXERCISE VALUE AT FISCAL YEAR-END (POUND) AT FISCAL YEAR-END ($)(2)
NAME (POUND) REALIZED ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
Walter E. Bartlett -- -- 200,000 -- $6,208,400 $ --
J. William Grimes 63,000 $ 1,589,250 -- -- -- --
Robert L. Turner -- -- 108,600 29,400 2,343,048 217,782
Robert E. Hamby, Jr. -- -- 109,000 31,000 1,648,958 226,382
Donald D. Sbarra -- -- -- -- -- --
William deB. Mebane -- -- 41,800 26,200 437,750 200,582
</TABLE>

(1) The values shown represent the excess of the fair market value on the
exercise date over the exercise price.
(2) The values shown represent the excess of the fair market value at December
31, 1993 over the exercise price of the shares covered by all unexercised
options held by the named executive.
The Board of Directors has approved a plan of Executive Salary Protection
(the Protection Plan) for selected executive officers, under which the Company
will pay, to each participant's beneficiary, a continuation of income in the
event of the participant's death. In the event of the death of a participant
while still employed prior to age 65 (or, in the case of Mr. Bartlett, in the
event of his death prior to January 1, 1995), the participant's beneficiary will
receive 100% of a specified dollar amount set from time to time by the Board of
Directors for that participant for one year and 50% of such amount for each of
nine additional years or until the employee's sixty-fifth birthday, whichever is
later. The specified dollar amount for Messrs. Bartlett, Turner, Hamby, Sbarra
and Mebane, as of December 31, 1993, was $350,000, $250,000, $250,000, $250,000
and $250,000, respectively. In conjunction with the Protection Plan, the Company
purchases life insurance on the life of each participant for the exclusive
benefit of the Company to indemnify the Company for its potential liabilities
under the Protection Plan. The insurance plan is designed so that, if the
assumptions made as to mortality and turnover experience, policy dividends, tax
savings, interest and other actuarial factors are realized, the Company should
recover all its payments, plus a factor for the use of the Company's money.
12

<PAGE>
The following table sets forth the annual pension benefit payable under the
Company's retirement pension plan (the Pension Plan) to an employee, including
any employee who is a director or an officer, upon retirement in 1994, at age
65, based on selected periods of service.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
AVERAGE
ANNUAL YEARS OF SERVICE
EARNINGS 10 15 20 25 30
<S> <C> <C> <C> <C> <C>
$100,000 $ 12,500.00 $ 18,750.00 $ 25,000.00 $ 31,250.00 $ 37,500.00
200,000 (2) 25,000.00 37,500.00 50,000.00 62,500.00 75,000.00
300,000 (2) 37,500.00 56,250.00 75,000.00 93,750.00 112,500.00
400,000 (2) 50,000.00 75,000.00 100,000.00 125,000.00(1) 150,000.00(1)
500,000 (2) 62,500.00 93,750.00 125,000.00(1) 156,250.00(1) 187,500.00(1)
600,000 (2) 75,000.00 112,500.00 150,000.00(1) 187,500.00(1) 225,000.00(1)
700,000 (2) 87,500.00 131,250.00(1) 175,000.00(1) 218,750.00(1) 262,500.00(1)
800,000 (2) 100,000.00 150,000.00(1) 200,000.00(1) 250,000.00(1) 300,000.00(1)
</TABLE>

(1) Exceeds the 1994 maximum amount payable under the Pension Plan of $118,800.
(2) Exceeds the 1994 maximum annual salary counted under the Pension Plan of
$150,000.
The Pension Plan covers all full-time employees of the Company and most of
its subsidiaries. The amount payable each year under the Pension Plan to a
participant is calculated using a percentage of the average of the employee's
cash compensation (including bonuses) during the employee's most recent five
highest consecutive compensation years out of the last ten worked, which
percentage is based on the employee's years of service, reduced by a factor
reflecting the participant's social security benefits, and is adjusted if
retirement occurs prior to normal retirement age. Under this plan, Mr. Bartlett
has 26 years of service; Mr. Turner has 3 years of service; Mr. Hamby has 9
years of service; Mr. Sbarra has 25 years of service and Mr. Mebane has 23 years
of service.
In April and July 1991, the Board of Directors adopted a Supplemental
Retirement Program for Messrs. Bartlett and Sbarra which provides an annual
supplemental retirement benefit for ten years. The Program provides for monthly
vesting on a pro-rata basis beginning July 1, 1991 through December 31, 1994, so
that Messrs. Bartlett and Sbarra vest 1/42 per calendar month of work completed
prior to retirement. The fully vested annual supplemental retirement benefit
will be $200,000 for Mr. Bartlett and $100,000 for Mr. Sbarra.
OTHER
Pursuant to agreements with J. William Grimes, he was provided with a 1991
$300,000 one-time payment, which is included in the summary compensation table,
the Company purchased Mr. Grimes' Connecticut home in 1993 for $2.1 million (its
approximate appraised value) plus closing
13

<PAGE>
costs to facilitate Mr. Grimes moving his residence to Greenville, SC, and prior
to that purchase the Company made an interest free loan to Mr. Grimes as a
second mortgage on the Connecticut home in the amount of $350,000 and an
additional interest free first mortgage loan for the purchase and remodeling of
a home in Greenville, SC, of $800,000. Both of these loans were repaid in
connection with the Company's purchase of the Connecticut home. The Company sold
the Connecticut home in 1993 for $1,800,000, less closing costs.
Robert L. Turner had an agreement with the Company pursuant to which his
base salary in 1991 was $325,000 and he received in 1991 a one-time payment of
$25,000. The agreement provided that, if Mr. Turner's employment with the
Company had been terminated without cause in 1993, the Company would have paid
him a lump sum equal to 100% of his base salary.
Under a deferred compensation agreement, William deB. Mebane, or his
beneficiary, is entitled to receive $2,500 per year for 10 years in the event of
his pre-retirement death or disability or upon his retirement.
Outside directors receive annual fees of $19,200 each, paid on a monthly
basis, and attendance fees of $1,000 per board meeting and $350 per committee
meeting in addition to the directors' fees. Directors receive reimbursement of
travel expenses. In addition, under the Director Stock Option Plan, each
non-employee director receives an initial option for 5,000 shares of the
Company's common stock and subsequent annual option grants for 1,000 shares of
the Company's common stock. The exercise price of each of these options is or
will be the common stock's market price on the date of grant.
NOTWITHSTANDING ANY STATEMENT IN ANY OF THE COMPANY'S PREVIOUS FILINGS
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE EXCHANGE ACT INCORPORATING
FUTURE FILINGS, INCLUDING THIS PROXY STATEMENT, IN WHOLE OR IN PART, THE
FOLLOWING REPORT AND THE PERFORMANCE GRAPH BELOW SHALL NOT BE INCORPORATED BY
REFERENCE INTO ANY SUCH FILING.
REPORT OF THE COMPENSATION COMMITTEE
AND STOCK OPTION COMMITTEE
The Compensation Committee (the Compensation Committee) of the Board of
Directors periodically submits to the Board recommendations respecting the
salary, bonus and other non-stock compensation to be provided to the Company's
executive officers. The Stock Option Committee (the Stock Option Committee) of
the Board grants options for the Company's common stock to the Company's
executive officers and employees. These Committees provide the following joint
report.
14

<PAGE>
EXECUTIVE OFFICER COMPENSATION
The Committees believe that the Board and its committees must act on the
shareholders' behalf in establishing executive compensation programs, because
the Company's shareholders ultimately bear the cost of these programs. The
Company's executive compensation philosophy and the structure and administration
of the executive compensation programs are adopted and effected in accordance
with that belief. The Committees annually review the Company's corporate
performance and that of its executive officers in determining appropriate
compensation. The Committees strive to sustain a balance between the Company's
need to attract and retain qualified and motivated executives, on the one hand,
and the maximization of the Company's operating performance and the safeguarding
of its assets in order to enhance long-term shareholder value, on the other.
The Committees' executive compensation philosophy is to provide for
risk-based pay opportunities that reflect Company and individual performance. In
addition, the Company's executive compensation is structured to (i) align
executive compensation with Company and individual performance, (ii) ensure
compensation fairness and consistency in accordance with individual
responsibilities and performances and (iii) emphasize both short and long-term
Company performance. The current executive compensation structure consists of
base salary, annual cash incentive bonus programs and stock options.
During the last few years, an increasing portion of each executive's total
compensation has become dependent on annual Company performance. The applicable
performance measurements have broadened from primarily goals (1985 to 1990)
relating to operating cash flow (as defined by the Company) to operating cash
flow goals plus (beginning in 1991) individual performance objectives.
The Compensation Committee's guiding objective in the establishment of base
compensation is to provide a competitive salary in light of the executive's
level and scope of responsibilities, the executive's performance and the
Company's salary budget. The Compensation Committee periodically has the
Company's executive base salaries compared with marketplace information, so that
a near median relation is sought. This comparison is based on the Towers Perrin
Media Industry Compensation Survey of 86 companies (including 16 of the 19
companies in the Company's Peer Group Index). The base level of income is
modified annually, based on subjective judgements, by the Compensation
Committee, considering such factors as the cash flow performance of the Company
or the applicable division, any change in the individual's responsibility or
geographic location and the Company's overall salary budget.
To motivate and reward the accomplishment of annual corporate, divisional
and individual objectives, the Compensation Committee has approved a Management
Committee Incentive Plan (MCIP). This plan provides for annual cash compensation
awards to executive officers (other than the chief executive officer and
chairman of the board) that vary from 0% to 100% of base
15

<PAGE>
salary depending upon the achievement of net operating cash flow levels
determined by the Company's management by reference to the Company's annual
budget approved by the Board and objective and subjective key individual goals
specified by the chief executive officer (in the case of Mr. Hamby) or the chief
operating officer (in the case of the other executive officers covered by the
plan). As a pay-for-performance bonus plan, year-end incentive awards are paid
only if minimum performance thresholds are met. Participants are subject to two
performance measures: (1) corporate/divisional operating cash flow goals which
govern 75% of the possible award and provide for the minimum bonus payment if
95%, and the maximum bonus payment if 110%, of the applicable cash flow goal is
met, and (2) key individual objectives which are weighted based on their
importance to the Company and account for 25% of the potential award. These
components provide a superior incentive award opportunity if superior results
are achieved. For 1993, each division achieved at least 95% of its budgeted cash
flow goal, and the Company achieved 98.5% of its cash flow goal. Each of the
officers covered by the MCIP achieved at least 90% of his key individual
objectives during 1993.
The 1993 bonus paid to Mr. Sbarra, who was not a participant in the MCIP in
1993, was awarded by the Compensation Committee because of his new role as
Senior Vice President -- Operations.
The Stock Option Committee believes that significant executive stock
ownership is a major incentive in building shareholders' wealth and aligning the
interest of executives and shareholders. Stock options are granted to officers
and other employees by the Stock Option Committee and generally vest over a
five-year employment period.
Numerous objective and subjective factors are considered by the Stock
Option Committee in the allocation of stock options among operating divisions,
business units and individual executives. Some of the more important factors
considered are:
Operating cash flow contribution
Operating profit contribution
Operating cash flow contribution less capital expenditures
Number of business locations or staff functions managed
Number of key executives managed
Future potential of the key executive
Commencing in 1994, the Omnibus Budget Reconciliation Act of 1993 denies
publicly traded companies the ability to deduct for federal income tax purposes
certain compensation paid to top executive officers in excess of $1 million per
person. The Compensation Committee and the Stock Option Committee intend in 1994
to examine the new rules and determine whether the Company may provide
non-deductible executive compensation.
16

<PAGE>
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Bartlett joined the Company in 1976, served as its chief executive
officer from December 1984 to April 1993 and assumed the Board chairmanship in
1989. Mr. Grimes was elected chief executive officer in April 1993 and resigned
that position in December 1993. Mr. Bartlett reassumed the position of chief
executive officer in December 1993. Mr. Bartlett was President of the Company
through its recapitalization merger on October 1, 1985 which allowed the
Company's shareholders generally to convert each share of stock into such
combination of cash, subordinated debenture and proportionate share of the
recapitalized company's stock as was elected by the shareholder. Based on the
price of the Company's common stock, the Company's shareholders earned from the
recapitalization merger price ($3.33 per share) to December 31, 1993 a total
return of 931% (reflecting an annual compound growth rate of 33%).
The Chief Executive Officer's base salary is determined by the Compensation
Committee in its sole discretion based on comparisons with marketplace
information as described above under Executive Officer Compensation.
While annual shareholders' total return is important, it is subject to the
vagaries of the market. The annual cash bonus paid to the Company's chief
executive officer is determined by the Compensation Committee in its sole
discretion. In exercising this discretion, the Compensation Committee considers
subjective factors, and specific corporate goals that should ultimately be
reflected in higher stock prices, such as operating cash flow, net earnings and
earnings per share, and the amount of the cash bonus which the chief executive
officer would have received had he been subject to the MCIP.
Mr. Grimes was not granted a bonus at year-end because his resignation was
prior to year-end. However, the severance payments to Mr. Grimes are equivalent
to approximately one year's salary plus $213,000 in lieu of a year-end bonus.
During recent years, changes in Mr. Bartlett's bonus compensation have
generally paralleled the Company's operating performance. In 1993, Mr.
Bartlett's bonus was less than his 1992 bonus reflecting the fact that the
Company achieved less than 100% (98.5%) of its operating cash flow goals. In
1993, Mr. Bartlett's annual compensation decreased 10%, the Company's operating
cash flow increased 9%, and net earnings and earnings per share excluding one
time unusual accounting adjustments increased 19% and 17%, respectively. Since
1988, the Company's operating cash flow has increased 35%, net earnings have
increased 168%, and earnings per share have increased 158%. These operating
performance results compare to a 58% increase in Mr. Bartlett's annual cash
compensation since 1988.
Upon his election as chief executive officer in 1993, Mr. Grimes was
awarded 100,000 stock options which he forfeited upon his resignation in
December 1993.
17

<PAGE>
In view of the stock options which Mr. Bartlett received in connection with
the Company's recapitalization merger, he has not been granted any stock options
since 1985.
<TABLE>
<S> <C>
COMPENSATION COMMITTEE STOCK OPTION COMMITTEE
John T. LaMacchia, Chair John T. LaMacchia, Chair
David L. Freeman George H. V. Cecil
Elizabeth P. Stall Rhea T. Eskew
William C. Stutt Leslie G. McCraw
Dorothy P. Ramsaur
Elizabeth P. Stall
William C. Stutt
</TABLE>

<PAGE>
PERFORMANCE GRAPH
A line graph comparing the cumulative total shareholder return on the
Common Stock of the Company for the last five fiscal years with the cumulative
total return of the NASDAQ Market Index and a Company selected peer group over
the same period is presented below:
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
AMONG MULTIMEDIA, INC.,
NASDAQ MARKET INDEX AND PEER GROUP INDEX

(Performance Graph appears here--see appendix for listing of plot points)

ASSUMES $100 INVESTED ON JANUARY 1, 1989 AND DIVIDEND REINVESTMENT
Note: The peer group consists of the following companies:
A. H. Belo Corporation
Capital Cities/ABC, Inc.
CBS, Inc.
Comcast Corporation
Dow Jones & Company, Inc.
Gannett Co, Inc.
Knight-Ridder, Inc.
Lee Enterprises
Media General, Inc.
Multimedia, Inc.
New York Times Company
Park Communications, Inc.
Scripps Howard Broadcasting
Company
TCA Cable TV, Inc.
Tele-Communications, Inc.
Times Mirror Company
Tribune Company
Viacom, Inc.
Washington Post Company
The peer group used in the Company's Performance Graph contained in the
Company's 1993 Proxy Statement included Affiliated Publications, Inc., the stock
of which ceased being publicly traded in 1993.
19

<PAGE>
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The following directors served on the Compensation Committee during 1993:
John T. LaMacchia, as Chair, David L. Freeman, Elizabeth P. Stall and William C.
Stutt. The following directors served on the Stock Option Committee during 1993:
John T. LaMacchia, as Chair, George H. V. Cecil, Rhea T. Eskew, Leslie G.
McCraw, Dorothy P. Ramsaur, Elizabeth P. Stall and William C. Stutt.
During 1993, David L. Freeman served as the Secretary for the Company and
various of its subsidiaries and was employed by the Company in that capacity.
The law firm of Wyche, Burgess, Freeman & Parham, P.A., of which Mr. Freeman is
a member, serves as the Company's general counsel and was paid approximately
$520,000 by the Company in 1993 for its legal services. Prior to 1990, Rhea T.
Eskew was an officer of the Company. William C. Stutt is a limited partner of
The Goldman Sachs Group, L.P., the 99% general partner of Goldman, Sachs & Co.
which has provided investment banking services for the Company on several
occasions in the past. In addition, Goldman Sachs is a market maker in the
Company's shares. Goldman Sachs may, from time to time, provide similar or other
services for the Company.
ELECTION OF AUDITORS
The Board of Directors recommends the ratification of the appointment of
KPMG Peat Marwick, independent certified public accountants, as auditors for the
Company and its subsidiaries for 1994 and to audit and report to the
shareholders upon the financial statements as of and for the period ending on
December 31, 1994. Representatives of KPMG Peat Marwick will be present at the
meeting, and such representatives will have the opportunity to make a statement
if they desire to do so and will be available to respond to appropriate
questions which the shareholders may have. KPMG Peat Marwick has acted for the
Company in this capacity since 1969, and neither the firm nor any of its members
has any relation with the Company except in the firm's capacity as such auditors
and tax advisers.
The appointment of auditors is approved annually by the Board of Directors
and subsequently submitted to the shareholders for ratification. The decision of
the Board is based on the recommendation of the Audit Committee.
VOTING AND OTHER SHAREHOLDER RIGHTS
Only holders of the Company's 37,274,978 shares of common stock of record
at the close of business on March 3, 1994 will be entitled to vote at the Annual
Meeting. The shareholders' common stock may not be voted cumulatively in the
election of Directors.
20

<PAGE>
Directors will be elected by a plurality of the votes cast at the meeting.
The affirmative vote of more shares present or represented at the Annual Meeting
voting in favor than voting against will be required to ratify the appointment
of auditors. Abstentions and broker non-votes, which are separately tabulated,
are included in the determination of the number of shares present and voting,
but have no effect on the votes respecting the matters to be voted upon at the
meeting.
In September 1989, the Company declared a dividend distribution of one
common share purchase Right for each then and subsequently outstanding share of
the Company's common stock. The Rights are designed to assure that all the
Company's shareholders, other than an acquiring person, receive equal treatment
in the event of any proposed takeover of the Company. Each Right will entitle
the holder to buy from the Company one share of common stock at an exercise
price of $133.33.
The Rights will be exercisable only if a person or group acquires 15% or
more of the Company's common stock or announces a tender or exchange offer, the
consummation of which would result in beneficial ownership by a person or group
of 15% or more of the common stock. If a person or group acquires beneficial
ownership of 15% or more of the Company's outstanding common stock, each holder
of a Right, other than Rights beneficially owned by the acquiring person or
group, will have the right to purchase common shares of the Company having a
market value of twice the exercise price of the Right (or such lesser number of
shares for such proportionately lesser purchase price as is permitted by the
amount of the Company's unissued authorized shares). Further, at any time after
a person or group acquires beneficial ownership of 15% or more (but less than
50%) of the Company's outstanding common stock, the Board of Directors may, at
its option, exchange part or all of the Rights (other than Rights beneficially
owned by the acquiring person or group) for shares of the Company's common stock
on a one-for-one basis. If the Company is acquired in a merger or other business
combination transaction or participates in any of certain specified
extraordinary transactions, each holder of a Right, other than Rights
beneficially owned by a person or group beneficially owning 15% or more of the
Company's outstanding common stock, will thereafter have the right to purchase
common shares of the acquiring or surviving company which at the time of such
transaction will have a market value of twice the exercise price of the Right.
Prior to the acquisition by a person or group of beneficial ownership of
15% or more of the Company's common stock, the Rights are redeemable for
one-third of one cent per Right at the option of the Board of Directors. If
unexercised, the Rights expire September 6, 1999.
21

<PAGE>
SOLICITATION OF PROXIES
The Company will pay the cost of soliciting proxies in the accompanying
form. In addition to solicitation by mail, proxies may be solicited by
directors, officers and other regular employees of the Company by telephone,
telegram or personal interview for no additional compensation. Arrangements will
be made with brokerage houses and other custodians, nominees and fiduciaries to
forward solicitation material to beneficial owners of the stock held of record
by such persons, and the Company will reimburse such persons for reasonable
out-of-pocket expenses incurred by them in so doing. To assure the presence in
person or by proxy of the largest number of shareholders possible, D. F. King &
Co., Inc. has been engaged to solicit proxies on behalf of the Company for an
estimated fee of $8,000 plus reasonable out-of-pocket expenses.
PROPOSALS OF SECURITY HOLDERS
Any shareholder of the Company who desires to present a proposal at the
1995 Annual Meeting of Shareholders for inclusion in the proxy statement and
form of proxy relating to that meeting must submit such proposal to the Company
at its principal executive offices on or before November 16, 1994.
FINANCIAL INFORMATION
THE COMPANY'S 1993 ANNUAL REPORT IS BEING MAILED TO SHAREHOLDERS ON OR
ABOUT THE DATE OF MAILING THIS PROXY STATEMENT. THE COMPANY WILL PROVIDE,
WITHOUT CHARGE TO ANY RECORD OR BENEFICIAL SHAREHOLDER AS OF MARCH 3, 1994, WHO
SO REQUESTS IN WRITING, A COPY OF SUCH 1993 ANNUAL REPORT OR THE COMPANY'S 1993
ANNUAL REPORT ON FORM 10-K (WITHOUT EXHIBITS), INCLUDING THE FINANCIAL
STATEMENTS AND THE FINANCIAL STATEMENT SCHEDULES, FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION. ANY SUCH REQUEST SHOULD BE DIRECTED TO MULTIMEDIA, INC.,
305 S. MAIN STREET, POST OFFICE BOX 1688, GREENVILLE, SOUTH CAROLINA 29602,
ATTENTION: MARKEETA L. MCNATT, CORPORATE COMMUNICATIONS.
22

<PAGE>
OTHER BUSINESS
As of the date of this Proxy Statement, the Board of Directors was not
aware that any business not described above would be presented for consideration
at the Annual Meeting. If any other business properly comes before the meeting,
it is intended that the shares represented by proxies will be voted with respect
thereto in accordance with the judgment of the person voting them.
The above Notice and Proxy Statement are sent by order of the Board of
Directors.
David L. Freeman, SECRETARY
Greenville, South Carolina
March 15, 1994
23

<PAGE>
<TABLE>
<S> <C>
PROXY MULTIMEDIA, INC.
P.O. Box 1688
Greenville, S.C. 29602
</TABLE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Walter E. Bartlett and Robert E. Hamby, Jr. and
each of them as Proxies, each with the power to appoint his substitute and
hereby authorizes each of them to represent and to vote, as designated below,
all the shares of common stock of Multimedia, Inc. held of record by the
undersigned on March 3, 1994 at the annual meeting of shareholders to be held
April 20, 1994 or any adjournment thereof.
1. Election of Directors
<TABLE>
<CAPTION>
<S> <C>
FOR all nominees listed below [ ] WITHHOLD AUTHORITY [ ]
(EXCEPT AS MARKED TO THE CONTRARY BELOW) TO VOTE FOR ALL NOMINEES LISTED BELOW
</TABLE>
W. E. Bartlett, G. H. V. Cecil, R. T. Eskew, D. L. Freeman, M. D. Hagy, R. E.
Hamby, Jr., J. T. LaMacchia,
L. G. McCraw, D. P. Ramsaur, D. D. Sbarra, E. P. Stall and W. C. Stutt
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE WRITE
THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)
2. Proposal to ratify the appointment of KPMG Peat Marwick as independent
auditors of the Company for 1994.
[ ] FOR [ ] AGAINST [ ] ABSTAIN

<PAGE>
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
This proxy when properly executed will be voted in the manner directed herein
by the undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED IN FAVOR OF PROPOSALS 1 AND 2.
Please sign exactly as name appears on
this proxy. When shares are held by
joint tenants, both should sign. When
signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such. If a
corporation, please sign in full
corporate name by President or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person.

Signature

Signature if held jointly
DATED , 1994
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.

*****************************************************************************
APPENDIX
On the Notice of Annual Meeting of Shareholders page, the Multimedia,
Inc. logo appears at the top of the page where noted.

On Page 19 the Performace Graph appears where noted. The plot points
are listed as follows:

1988 1989 1990 1991 1992 1993
Multimedia, Inc. 100 123.20 89.54 90.29 127.58 134.45
Peer Group Index 100 128.70 103.55 115.40 136.61 170.74
NASDAQ Market 100 112.89 91.57 117.56 118.71 142.40